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PRECIOUS-Gold gains modestly from 2-1/2 month low on physical buying

* Gold ticks up 0.3 percent on technical, physical buying

* Physical buying in Asia picking up - trader

* Coming Up: European Central Bank meeting

(Adds trader comments, updates prices) SINGAPORE, Sept 4 (Reuters) - Gold inched up on Thursday on technical and physical buying interest in Asia, but prices continued to hover near a 2-1/2 month low as brighter prospects for the U.S. economy and the dollar dimmed the metal's appeal. Investors were waiting for a European Central Bank meeting later in the day to see whether it will deliver a fresh round of policy stimulus, and its impact on the euro and the dollar. Spot gold rose 0.3 percent to $1,272.56 an ounce by 0334 GMT. The metal fell to a low of $1,261.19 on Wednesday, its weakest since mid-June, before closing with a small gain. "There is some technical buying after gold prices failed to retain losses below $1,265," said a precious metals trader in Hong Kong. "We can see some fresh buying interest in the $1,260-$1,270 range. Physical buying from Asia is also supporting." Gold, seen as an alternative investment during times of geopolitical and financial uncertainties, has gained about 5 percent this year amid tensions in Ukraine and the Middle East. But bullion investors continue to worry over strong U.S. economic data and its impact on the dollar. In recent days, a string of encouraging U.S. economic data, along with a sell-off in the euro and the yen, has boosted the dollar. A stronger greenback hurts dollar-denominated gold as it makes the metal more expensive for holders of other currencies.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and a good measure of investor sentiment, said its holdings fell 2.69 tonnes to 790.51 tonnes on Wednesday. U.S. nonfarm payrolls data due on Friday will be closely watched for further clues about the economy and the outlook for the Federal Reserve's monetary stimulus. On Thursday, all eyes will be on the ECB policy meet. The ECB is under strong pressure to tackle stubbornly low inflation at a time when the conflict in Ukraine threatens to destabilise the region's fragile recovery. The euro on Wednesday recovered modestly from one-year lows against the dollar, but traders said euro bears were just taking a breather ahead of the ECB meet. Any further weakening of the euro would hurt gold. "The ECB meeting is more likely to be gold-bearish than gold-bullish," HSBC analysts said in a note. "Gold is likely to be more influenced by U.S unemployment data due at the end of the week and the general direction of the dollar." Among other precious metals, platinum and palladium - used in auto manufacturing - gained as U.S. August auto sales were the highest for that month in more than a decade.

PRICES AT 0334 GMT

Metal Last Change Pct chg Spot gold 1272.56 3.99 0.31 Spot silver 19.18 0.05 0.26 Spot platinum 1413.2 11.6 0.83 Spot palladium 875.5 3.9 0.45 Comex gold 1273.6 3.3 0.26 Comex silver 19.245 0.056 0.29 Euro 1.3148 DXY 82.847

COMEX gold and silver contracts show the most active months

(Editing by Himani Sarkar)