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Gold rises as euro bounces; physicals

* Gold bounces on euro, physical buying

* Nikkei surges 1.6 percent, oil up

* Coming Up - U.S. GDP final estimate for Q4, 1230 GMT

March 26 (Reuters) - Gold gained half a percent
on Friday after the euro rebounded from a 10-month low against
the U.S. dollar, while steady purchases from jewellers in Asia
offered additional support.

Bullion has dropped more than $10 this week, mainly due to
a rally in the dollar and uncertainty over a bailout package
for debt-ridden Greece, but an increase in ETF holdings showed
gold still attracted investors as currencies remained volatile.

The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust (GLD), said its holdings stood at 1,124.647 tonnes
as of March 25, up 4.568 tonnes from the previous business day.

Spot gold XAU= was at $1,096.20 an ounce by 0632 GMT, up
$5.85 from New York's notional close on Thursday. Gold had
dropped to a 6-week low of $1,084.85 on Wednesday but was above
the 200-day moving average.

Gold started trading at around $1,088 on Friday and hit an
intraday low of $1,087.85 before stabilising at current levels
as dealers saw covering from jewellers and the industrial
sector in Asia as well as speculative buying driven by firmer

"We've seen physical buybacks in the market. It's not only
in Hong Kong," said Dick Poon, manager of precious metals at
Heraeus in Hong Kong.

Sentiment was neutral because a stronger dollar could still
spur selling in gold but on the other hand, physical buyers
were happy to buy on dips, said Poon. "We're seeing strong
demand on the physical side."

U.S. gold futures for April delivery GCJ0 rose $3.6 an
ounce to $1,096.50 an ounce.

In the physical market, jewellers pushed premiums for gold
bars higher in Hong Kong, while main consumer India was
stocking up as the wedding season begins again in April.
Dealers also noted active buying from jewellers in Indonesia
and Thailand. [GOL/AS]

The euro recovered from a 10-month low after euro zone
leaders agreed on a safety net for Greece which included the
IMF. Euro zone leaders agreed on a joint European-IMF financial
safety net for Greece after weeks of wrangling. [USD/]

The euro rose 0.5 percent against the dollar from late U.S.
levels to $1.3340 EUR= after hitting its weakest level since
early May at $1.3267 on trading platform EBS.

The dollar index .DXY, which measures the greenback's
performance against six other major currencies, hovered just
below a 10-month high at 82.240 after gaining sharply in the
past few days as U.S. yields have risen.

"I do think we might get a little bit of a recovery in euro
which will help it. I still maintain the feeling that we'll see
it bounce again," said Darren Heathcote, head of trading of
Investec Australia in Sydney, who expected bullion to regain to
$1,100 next week.

"Probably there will be more buying on the dips. We'll look
the trend to resume," said Heathcote, referring to physical

Dealers said physical demand for gold rose in India, the
world's biggest bullion consumer, after prices fell to
attractive levels ahead of the wedding season in April.

Japan's Nikkei average surged 1.6 percent to its highest
close in about 18 months on Friday, with exporters buoyed by
the yen's recent dip to two-month lows against the dollar. [.T]

Oil climbed towards $81 on Friday after an agreement to
create a safety net for Greece. [O/R]
Precious metals prices at 0632 GMT
Metal             Last    Change  Pct chg  YTD pct chg
Spot Gold        1096.20    5.85   +0.54      0.05
Spot Silver        16.77    0.21   +1.27     -0.36
Spot Platinum    1598.00    1.00   +0.06      8.93
Spot Palladium    454.75    4.25   +0.94     12.15
TOCOM Gold       3271.00   40.00   +1.24      0.37       
TOCOM Platinum   4741.00   97.00   +2.09      8.22       
TOCOM Silver       50.50    0.70   +1.41     -2.32         
TOCOM Palladium  1346.00   41.00   +3.14     15.54         
Euro/Dollar       1.3343
Dollar/Yen         92.49
TOCOM prices in yen per gram. Spot prices in $ per ounce.