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.

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.

Spot gold was bid at $1,253.55 a troy ounce at 1342 GMT from $1,244.05 an ounce late in New York on Thursday. The metal earlier hit a session high of $1,256.00 an ounce.

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 weakness in U.S. and European equities.

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.

Trading could remain subdued as the market awaited the conclusion of the Group of 20 leaders' summit this weekend. Disagreements about the best way to ensure 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, 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, 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.

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, 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.

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 $18.84 an ounce from $18.65 late in New York on Thursday, platinum was at $1,559.50 from $1,557.50 and palladium at $470.0 from $471.00.

(Editing by Keiron Henderson)

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