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

                                
 * Renewed Europe contagion risk boosts gold as safe haven
                                
 * Gold could retest record if G20 disappoints
                                
 * Jitters after Congress agrees on historic Wall St reform
 (Recasts, updates prices to market close)
                                
 By Frank Tang
                                
 NEW YORK, June 25 (Reuters) - Gold prices rose to within
$10 of their all-time high on Friday as investors sought refuge
from financial market uncertainty and currency depreciation
ahead of a closely watched G20 meeting.
                                
 Friday's gains lifted the metal within striking distance of
the record high $1,264.90 set Monday on euphoria related to
China's vow to relax the yuan, but the rally was short-lived
and bullion snapped 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 into gold due to a global
equity market slump. [.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 ebbed
after an agreement by U.S. lawmakers to overhaul financial
market regulation on Wall Street. U.S. stocks turned higher
late in the session on a bank shares rally. [ID:nN2593529]
[.N]
                                
 Spot gold <XAU=> was at $1,253.85 an ounce at 3:05 p.m. EDT
(1905 GMT), up 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. U.S. August futures <GCQ0> settled up $10.30 at
$1,256.20 an ounce.
                                
 Late-session gains in the euro against the dollar and a
crude oil rally stirred by the possibility of an Atlantic
tropical storm developing also powered gold's gains. [FRX/]
[O/R]
                                
 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 developments out of the Group of 20 summit this
weekend. Disagreements about the best way to ensure growth and
fiscal responsibility could add to gold's appeal. [MKTS/GLOB]
[ID:nN25200590]
                                
 FED PLEDGES ON LOW INTEREST RATES
                                
 Gold over the past couple of years has 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, an 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]
                                
 The Fed's statement dampened 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.
                                
 And that explains 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 $19.03 an ounce, up from $18.65
late in New York on Thursday. Platinum <XPT=> was at $1,565, up
from $1,557.50, and palladium <XPD=> was at $476.50, up from
$471.
Prices at 3:12 p.m. EDT (1839 GMT)    
                                
                          LAST/      NET    PCT     YTD
                                
                          CLOSE      CHG    CHG     CHG
US gold         <GCQ0>     1256.20    10.30   0.8%   14.6%
US silver       <SIN0>      19.110    0.374   0.0%   13.4%
US platinum     <PLN0>     1570.40     8.90   0.6%    6.8%
US palladium    <PAU0>      477.90     7.90   1.7%   16.9%
Gold            <XAU=>     1253.80     9.75   0.8%   14.4%
Silver          <XAG=>       19.03     0.38   2.0%   13.0%
Platinum        <XPT=>     1565.00     7.50   0.5%    6.8%
Palladium       <XPD=>      476.50     5.50   1.2%   17.5%
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 Pratima Desai and Maytaal Angel in
London; Editing by Walter Bagley)