* Euro recovers versus dollar after heavy losses
* Traders report fresh physical buying as prices fall
* Coming up: European Union leaders meet for summit
(Updates prices, adds comment)
By Jan Harvey
LONDON, March 25 (Reuters) - Gold rose on Thursday as the
euro firmed versus the dollar ahead of a European Union summit
to discuss Greece's debt crisis, with recovering physical demand
after the last session's price dip also supporting the market.
Spot gold <XAU=> was bid at $1,091.35 an ounce at 1456 GMT,
against $1,086.50 late in New York on Wednesday. U.S. gold
futures for April delivery <GCJ0> on the COMEX division of the
New York Mercantile Exchange rose $2.90 to $1,091.70 an ounce.
The precious metal fell to a six-week low of $1,084.85 an
ounce on Wednesday as the euro slid more than 1 percent versus
the dollar. The euro's recovery has given it some respite.
"(Gold) has held up pretty well during this recent dollar
rally but i suppose again it is due to the two factors pulling
it -- sovereign debt worries against a stronger dollar," said
Ole Hansen, senior manager at Saxo Bank.
"The slight worry is that we have seen lower highs every
time we attempted a break to the upside. This now leaves the
market vulnerable to the downside."
The precious metal has also met with good buying interest on
the physical side as prices fell, traders said.
Dealers reported physical demand for gold in India, the
world's biggest bullion consumer, rose after prices fell to
attractive levels, as traders resumed buying to stock up for the
wedding season that begins in April. []
"We are still seeing safe haven buying of small coins and
bars, and as prices drop we see good physical demand in general,
which is absorbing some selling in the market," said Commerzbank
senior trader Michael Kempinski.
"Without the safe-haven idea, gold would already be much
lower," he added.
The euro <EUR=> rose from a 10-month low against the U.S.
dollar on Thursday ahead of a summit meeting of European leaders
to discuss possible aid for heavily-indebted Greece. []
German Chancellor Angela Merkel said International Monetary
Fund and bilateral European Union aid could be agreed as "last
resort." []
FOCUS ON GREECE
"The focus for the euro remains on Greece," said Credit
Agricole in a note. "The two-day EU Summit starts today with
muted hope that it will result in a clear and euro-friendly
resolution of the situation."
"The message that should resonate through the summit is that
the risk of negative fiscal sentiment spreading across the euro
zone has not gone away and remains a threat to the euro."
Among other commodities, oil prices turned higher, reversing
their early losses. []
Silver <XAG=> tracked gold higher, rising to $16.70 an ounce
from $16.53.
The U.S. Commodity Futures Trading Commission said on
Thursday it had not found that silver supplies were inadequate
to settle silver futures contracts. []
Platinum <XPT=> was at $1,594 an ounce against $1,577, while
palladium <XPD=> was at $447 against $442.50.
Both platinum group metals have taken support from
expectations for a recovery in car demand this year. Platinum
and palladium are chiefly used in autocatalysts.
Investment demand is also expected to support prices after a
subsidiary of London's ETF Securities launched U.S.-based
platinum and palladium exchange-traded funds earlier this year.
"Our fundamental outlook for the platinum group metals
remains more positive than that for gold and silver, as healthy
investor interest, combined with an expected pick up in demand
from the auto and industrial sectors should bode well for prices
in coming months," Barclays Capital said in a note.
(Editing by Anthony Barker)
