* Risk aversion, technical support lifts gold from lows
* Euro-priced gold hits record high at 826.35 euros/oz
* Dollar leaps after Fed lifts emergency lending rate
(Updates prices, metals price table)
By Alonso Soto and Jan Harvey
NEW YORK/LONDON, Feb 19 (Reuters) - Gold prices rose on
Friday, reversing early losses fueled by a stronger dollar, as
investors bought the metal to hedge against currencies'
volatility and debt default risks in Europe.
U.S. gold futures for April delivery <GCJ0> ended $3.40
higher at $1,122.10 an ounce at 3:38 p.m. EST (2038 GMT) on the
COMEX division of the New York Mercantile Exchange.
"Investors are buying gold as a hedge against currencies'
volatility," said Carlos Sanchez, a metals analyst with CPM
Group. "Gold seems to be consolidating near the $1,130 an ounce
area."
Gold priced in euros hit a record high of 826.35 euros an
ounce as investors sought to diversify away from the
beleaguered single currency.
Spot gold was bid at $1,119.50 an ounce at 3:38 p.m. EST
(2038 GMT) against $1,111.40 late in New York on Thursday,
having earlier touched a low of $1,098.55.
The metal's usual relationship with the U.S. currency --
strength in which normally weighs on the precious metal -- has
weakened as fears over the outlook for paper currencies in
general lifted interest in bullion as an alternative asset.
The dollar hit an eight-month high against a currency
basket on Friday, extending gains after the Federal Reserve's
surprise decision to raise its discount rate, its first hike in
the rate since mid-2006.
EMERGENCY LENDING
In its first interest rate move since December 2008, the
Fed lifted the emergency lending rate it charges banks to 0.75
percent from 0.5 percent, but insisted borrowing costs would
not rise for consumers or companies.
"This development ... is near-term gold-bearish, as it
reduces liquidity," HSBC analyst Jim Steel said in a note.
"Highly accommodative monetary policies have been an important
element in the gold rally."
He noted, however, the Fed's assertion that the change was
not expected to lead to tighter financial conditions or lead to
a change in the outlook for monetary policy.
"If this implies monetary policy will remain lax, then the
sell-off may be brief," he said.
On the wider markets, European shares snapped a four-day
winning streak to fall as banks suffered after the Fed
announcement, while U.S. stocks slipped at the open.
Among other commodities, oil prices recovered after earlier
falling $1 a barrel following the Fed move. Gold tends to track
crude prices, as the metal can be bought as a hedge against
oil-led inflation.
Physical demand for the precious metal was relatively
lacklustre, with holdings of the world's largest gold-backed
exchange-traded fund, New York's SPDR Gold Trust, unchanged for
a second session on Thursday.
Buying in India, the world's biggest gold consumer,
slackened. "Caution typically sets in after a big fall," said
one Mumbai-based gold dealer.
Silver was at $16.27 an ounce, against $15.84, with
platinum at $1,532 an ounce, against $1,514, and palladium at
$437, against $429.50.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1122.10 3.4 0.3 1096.20 2.4
US silver <SIH0> 16.413 0.353 2.2 16.845 -2.6
US platinum <PLJ0> 1543.60 24.00 1.6 1471.00 4.9
US palladium <PAH0> 442.35 7.10 1.6 408.85 8.2
Prices at 3:36 p.m. EST (2036 GMT)
Gold <XAU=> 1119.60 8.20 0.7 1096.35 2.1
Silver <XAG=> 16.28 0.44 2.8 16.84 -3.3
Platinum <XPT=> 1532.00 18.00 1.2 1465.50 4.5
Palladium <XPD=> 437.00 7.500 1.7 405.50 7.8
Gold Fix <XAUFIX=> 1112.75 5.75 0.5 1104 0.8
Silver Fix <XAGFIX=> 15.95 12.00 0.8 16.99 -6.1
Platinum Fix <XPTFIX=> 1513.00 7.00 0.5 1466 3.2
Palladium Fix<XPDFIX=> 435.00 7.00 1.6 402 8.2
(Editing by Walter Bagley and Lisa Shumaker)