* Gold still a favourite with investors
* Gold could see new record if G20 disappoints
* Lawmakers agree historic Wall Street reform
By Pratima Desai and Maytaal Angel
(Updates prices, adds details)
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 weekend G20 meeting.
Data released earlier showing the U.S. economy expanded at a
2.7 percent annual rate in the first quarter, down from the 3
percent pace initially reported last month, increased its
safe-haven appeal. []
Spot gold <XAU=> was bid at $1,253.75 a troy ounce at 1530
GMT from $1,244.05 an ounce late in New York on Thursday. The
metal earlier hit a session high of $1,256.65 an ounce.
"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.
Markets were watching the cost of protecting Greek
government debt against default, which rose to a record high on
Friday. They were also keeping a close eye on weak equities in
Europe. [] []
Trading could remain subdued, however, as the market awaits
the conclusion of a Group of 20 leaders' summit this weekend.
Any disagreements about the best way to ensure growth and fiscal
responsibility could add to gold's appeal. []
[]
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. []
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, spurred in large part by sovereign risk concerns
in Europe.
"Nobody is giving up on gold, there is too much uncertainty
in the world," said Andrey Kryuchenkov, an analyst at 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.
Earlier this week the U.S. 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 new record high at 1,316.177 tonnes as of June 24 from the
previous high of 1,313.135 tonnes on June 22. []
The Fed's downbeat statement has also weighed on industrial
precious metals including silver, used in electronics, and
platinum and palladium, used to make autocatalysts.
Spot silver <XAG=> was at $18.89 an ounce from $18.65 late
in New York on Thursday, while platinum <XPT=> was at $1,562.50
from $1,557.50 and palladium <XPD=> at $469.28 from $471.00.
(Editing by Jane Baird)
