(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 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 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 tons as of June 24 from the previous high of 1,313.135 tons 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 was at $18.67 an ounce from $18.65 late in New York on Thursday, platinum was at $1,561.50 from $1,557.50 and palladium at $471.50 from $471.00.

(Editing by James Jukwey)

Source: http://www.reuters.com/article/idUSTRE65E5NH20100625