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PRECIOUS-Gold inches up after dropping from 1-1/2 year highs

Jan 25 (Reuters) - Gold prices edged up on Friday, recovering from a fall of as much as over 1 percent from 1-1/2-year highs in the previous session after U.S. President Donald Trump backed a strong dollar.

FUNDAMENTALS

* Spot gold rose 0.3 percent to $1,350.86 per ounce at 0126 GMT. The precious metal has gained 1.5 percent so far this week.

* Spot gold rose to 1,366.07 on Thursday, the highest since Aug. 3, 2016. But, reversed gains after Trump told CNBC in an interview in Davos, Switzerland that he wants to see a strong dollar.

* U.S. gold futures were down 1 percent at $1,348.

* Trump's comment was a contradiction to comments made previously by Treasury Secretary Steven Mnuchin one day earlier

* The dollar index , which measures the greenback

against a basket of currencies, hit its weakest since Dec, 2014 at 88.438 on Thursday. It was last down 0.2 percent at 89.254.

* Euro surged on Thursday after European Central Bank President Mario Draghi said economic data pointed to "solid and broad" growth with inflation likely to rise in the medium term from subdued levels.

* China's net gold imports via main conduit Hong Kong fell 18.5 percent year-on-year in 2017 and were down 12.2 percent in December from the previous month, data showed on Thursday.

* Gold could break above $1,500 an ounce this year for the first time since its 2013 crash, GFMS analysts at Thomson Reuters said on Thursday, with the risk of a drop in surging equities and political instability boosting its appeal as a haven from risk.

* Gold bulls are likely to have their patience rewarded in what is tipped to be the strongest year since 2013 as real interest rates remain depressed and the U.S. dollar stays under pressure.

* Palladium prices are set for another record year in 2018 and a third next year as tightening emissions standards fuel demand for the autocatalyst metal, though corrections could be steep after the metal's recent surge to all-time highs.

DATA AHEAD (GMT)

0745 France Business climate Jan 0900 Euro zone Money supply Dec 0930 UK Preliminary GDP Q4 1330 U.S. Durable goods Dec 1330 U.S. Advance GDP Q4

(Reporting by Nallur Sethuraman in Bengaluru; Editing by Vyas Mohan)