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PRECIOUS-Gold rises as geopolitical risks drive safe-haven buying

* Euro weakens as Germany's Merkel faces coalition talks

* Physical gold demand soft across Asia -dealers

* GRAPHIC-2017 asset returns: http://tmsnrt.rs/2jvdmXl

(Updates prices; adds comment, second byline, NEW YORK dateline) NEW YORK/LONDON, Sept 25 (Reuters) - Gold prices rose on Monday, reversing earlier losses as geopolitical risks drove safe-haven buying. Bullion rose 1 percent on rising tensions between North Korea and the United States, and on German Chancellor Angela Merkel's less-than-resounding victory in Sunday's national election. North Korean Foreign Minister Ri Yong Ho said U.S. President Donald Trump had declared war on the Asian nation and Pyongyang reserves the right to take countermeasures, including shooting down U.S. bombers. Merkel must find partners to build a coalition government after securing a fourth term as German chancellor. Escalating U.S.-North Korea tensions will "create a shift in assets. People are going to come out of shiftier assets like the S&P 500 and go into safe havens like gold, silver and the U.S. treasuries," said Phillip Streible, senior commodities broker at RJO Futures in Chicago.

Spot gold was up 0.85 percent at $1,308.06 an ounce

election results hit the euro.

U.S. gold futures for December delivery settled up

$14, or 1.08 percent, at $1,311.50 per ounce. Gold has now slipped 3.5 percent from the more than one-year high it hit on Sept. 8, largely on the back of concerns over North Korea's nuclear ambitions.

The euro slipped against the dollar and southern

European government bonds sold off after the German election results sparked fears of a more hardline stance towards the euro zone in the bloc's largest economy. Gold has recently come under pressure from rising expectations the Federal Reserve will lift U.S. interest rates once more this year and start trimming its $4.5 trillion balance sheet, much of it built up after the 2008 financial crisis. Tighter monetary policy raises the opportunity cost of holding non-yielding bullion. The Chicago Federal Reserve Bank's president said on Monday he is a little "nervous" the causes of low inflation might be structural rather than temporary. Physical gold demand remained soft in major Asian markets last week despite lower prices, with consumers awaiting further dips, while a government move to bring transparency to bullion trading kept buyers on the sidelines in India.

Silver rose 0.93 percent to $17.108 an ounce after

falling more than 3.5 percent last week in the biggest weekly decline since early July.

Platinum was up 0.90 percent to $938.90 an ounce

after touching the lowest price since late July. Palladium was down 0.61 percent at $910.90 an ounce.

(Additional reporting by Nithin Prasad in Bengaluru; Editing by David Goodman and Paul Simao)