* Gold still a favourite with investors
* Gold could see new record, if G20 disappoints
By Pratima Desai
(Releads, updates prices)
LONDON, June 25 (Reuters) - Gold was buoyed on Friday by
investors looking for refuge from financial market uncertainty
and concerns about currency depreciation as the market waited
for the outcome of a G20 meeting.
Spot gold <XAU=> was bid at $1,246.65 a troy ounce at 1115
GMT from $1,244.05 an ounce late in New York on Thursday. The
metal earlier hit a session high of $1,247.15 an ounce.
Markets were watching the cost of protecting Greek
government debt against default, which rose to a record high on
Friday, raising fears about default and a sell-off of Spanish
and Portuguese debt, also seen to be vulnerable. []
"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."
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.
Markets are marking time and trading could remain subdued as
the market waits for the conclusion of the Group of 20 leaders'
summit this weekend. [] []
Disagreements about the best way to ensure both growth and
fiscal responsibility could add to gold's appeal.
"If the markets don't like what they hear, we could see
another run higher in gold and probably new record highs," a
trader said.
HEIGHTENED PREFERENCE
Spot gold hit a record high of $1,264.90 on June 21 and U.S
futures <GCc1> touched a contract high of $1,264.80 an ounce on
the same day compared with $1,246.50 on Friday.
"(With) U.S. rates set to remain low for some time gold will
likely gain further support and maintain its longer up-trend,"
TheBullionDesk.Com said in a note.
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, keeps it under pressure, 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. []
"We expect the increased importance of investment demand to
persist as investors continue to display a heightened preference
for less opaque assets following the global financial crisis,"
National Australia Bank said in a note.
The Fed's downbeat statement has also weighed on industrial
precious metals silver, used in electronics, and platinum and
palladium used to make autocatalysts.
Spot silver <XAG=> was at $18.67 an ounce from $18.65 late
in New York on Thursday, platinum <XPT=> was at $1,561.50 from
$1,557.50 and palladium <XPD=> at $471.50 from $471.00.
(Editing by James Jukwey)
