* Renewed Europe contagion risk boosts gold as safe haven
* Gold could see retest record if G20 disappoints
* Jitters seen as Congress agree historic Wall St reform
(Recasts, updates prices, adds comments, second byline, dateline)
By Frank Tang and Pratima Desai
NEW YORK/LONDON, June 25 (Reuters) - Gold rose nearly 1 percent on Friday as investors sought refuge from financial market uncertainty and currency depreciation as they awaited the outcome of a G20 meeting.
Friday's gains lifted the metal to $10 below its all-time high set Monday on euphoria related to China's vow to relax the yuan, but the rally was short-lived and the metal was on track to snap a four-week winning streak
Markets were watching the cost of protecting Greek government debt against default, which rose to a record high on Friday. Investors were also piling in gold due to ongoing weakness of the global equity markets. [
]"Sovereign risk has attracted establishment money into gold, which tends to be long-term money. It's about adding safe-haven security to portfolios. In the next few weeks you might see profit-taking but the trend is solidly upwards," said VM Group analyst Jessica Cross.
On the other hand, some financial market uncertainty has ebbed after an agreement by U.S. lawmakers to overhaul financial market regulation on Wall Street. The measures must still win approval from both chambers of Congress. [
]Spot gold <XAU=> was at $1,255.35 an ounce at 12:07 p.m. EDT (1607 GMT) from $1,244.05 an ounce late in New York on Thursday. The metal earlier hit a session high of $1,257.65 an ounce.
Data released earlier showing the U.S. economy expanded at a 2.7 percent annual rate in the first quarter instead of the 3 percent pace reported last month, also gave gold support by increasing its safe-haven appeal. [
]Traders said that gold could retest record highs on possible development out of the ongoing Group of 20 leaders' summit this weekend. Disagreements about the best way to ensure growth and fiscal responsibility could add to gold's appeal. [
] [ ]HEIGHTENED PREFERENCE
Gold has over the past couple of years benefited from perceptions that governments were quietly trying to depreciate their currencies to help boost exports and growth.
"Nobody is giving up on gold. There is too much uncertainty in the world," said Andrey Kryuchenkov, analyst VTB Capital.
"Gold is trading like a currency. People are not ready to liquidate their holdings. They are using price dips as buying opportunities -- that was the case at $1,230 support."
Earlier this week the Federal Reserve acknowledged the faltering pace of recovery in the United States, the world's largest economy, and renewed its pledge to hold interest rates at very low levels for a long time. [
]That decision has a two-fold effect on the gold market. It dampens dollar sentiment, which boosts demand for gold. Low or zero interest rates also mean there is no opportunity cost for holding gold, which earns no interest or dividends.
These two factors partly explain why holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to a record high at 1,316.177 tonnes as of June 24 from the previous high of 1,313.135 tonnes on June 22. [
]On market fundamentals, news that Russia's total gold output including scrap fell 6 percent year-on-year in the period from January to May improved overall sentiment. [
]James Steel, chief commodity analyst at HSBC said the news highlighted the difficulties in raising gold output in many producing nations, which is an important supportive factor in the metal's bull market.
Spot silver <XAG=> was at $19.07 an ounce from $18.65 late in New York on Thursday, platinum <XPT=> was at $1,567.50 from $1,557.50 and palladium <XPD=> at $472.80 from $471. Prices at 12:19 p.m. EDT (1619 GMT)
LAST NET PCT YTD
CHG CHG CHG US gold <GCQ0> 1258.80 12.90 1.0% 14.8% US silver <SIN0> 19.090 0.354 1.9% 13.3% US platinum <PLN0> 1572.60 11.10 0.7% 6.9% US palladium <PAU0> 477.05 7.05 1.5% 16.7% Gold <XAU=> 1257.55 13.50 1.1% 14.7% Silver <XAG=> 19.07 0.42 2.3% 13.2% Platinum <XPT=> 1567.50 10.00 0.6% 7.0% Palladium <XPD=> 474.50 3.50 0.7% 17.0% Gold Fix <XAUFIX=> 1254.00 11.50 0.9% 13.6% Silver Fix <XAGFIX=> 18.65 27.00 1.5% 9.8% Platinum Fix <XPTFIX=> 1556.00 1.00 0.1% 6.1% Palladium Fix <XPDFIX=> 471.00 1.00 0.2% 17.2% (Additional reporting by Maytaal Angel in London; Editing by Lisa Shumaker)