PRECIOUS-Gold rises toward $1,260/oz on financial uncertainty

                                
 * 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. [.N]
                                
 "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.
[ID:nN2593529]
                                
 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. [ID:nN25111163]
                                
 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.
[MKTS/GLOB] [ID:nN25200590]
                                
 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. [ID:nN22150078]
                                
 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.
[GOL/SPDR]
                                
 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.
[ID:nLDE65N1CW]
                                
 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)