Gold strengthened further on Monday as falling equities and lingering worries about a debt crisis in Europe drew investors to the precious metal, which posted its the biggest quarterly gain this year, but a firm U.S. dollar could still cap gains.

Stocks slipped in Asia and the euro fell on anxiety the euro zone's debt crisis will dampen global growth after the Greek government said it will miss a deficit target set just months ago in a massive bailout package.

Spot gold added $9.29 an ounce to $1,632.24 by 0308 GMT. Gold had posted a quarterly gain of 8 percent -- its biggest this year, despite a drop of 11 percent for September, its largely monthly decline in three years.

Gold rises despite a firmer U.S. dollar ... perhaps gold's appeal as a safe haven asset has been reinstated. Also, the market appears to be buying on the dip, said Natalie Robertson, a commodities strategist at ANZ.

Now there appears to be strong buying interest towards the $1,500 an ounce level.

U.S. gold rose $11.7 to $1,634 an ounce.

Gold jumped to a lifetime high around $1,920 an ounce in early September after the euro fell against the dollar on growing doubts about Europe's ability to solve its debt crisis.

European Central Bank member Christian Noyer said on Monday it is unrealistic to expect an increase in Europe's bailout fund beyond what was agreed in July, but that he is open to schemes that would allow leveraging to expand capacity.

Jitters over the spiralling European debt crisis, European banks' exposure to sovereign debt and a slowing global economy caused investors to cut their bets on risky assets in the July-September quarter, sending the euro down almost 10 cents versus the dollar over the period.

In the physical market, tight supply persisted after a recent drop in bullion prices triggered aggressive buying across Asia.

Basically people are trying to fulfil the orders. I don't have much stock. There's still some buying around and also advance booking, said a physical dealer in Singapore.

Premiums for gold bars were steady at $2 an ounce to spot London prices in Singapore. Demand from top consumer India is also picking up during the wedding season, when gold jewellery is an essential part of the dowry basket.

In India, retail gold demand traditionally gains pace from the month of August, when the festival and wedding seasons start, culminating with Diwali, the Hindu festival of light.

Precious metals are expected to trade higher this week and throughout this month as they recover from the late-Sept selloff. The gold market could advance toward the $1,675-$1,700 range while silver trades toward $33.00, said precious metals and energy analyst at MF Global Tom Pawlicki.

After a poor showing and high volatility in September, metals could recover this week due to favourable quarter-end seasonal patterns, the ongoing uncertainty in Europe, a developing economic slowdown in China, and from the increased potential of a double-dip recession in the U.S.

The euro plunged to an eight-month low against the dollar on Monday and is poised to fall further, with Europe still divided over the best cure for the debt crisis and with the possibility of a Greek default looming larger than ever

The dollar index hit an eight month high, edging up 0.5 percent to 78.888.

Oil fell more than a dollar on Monday on growing fears the euro debt crisis may spread to other parts of the region and dampen global oil demand.

Precious metals prices 0308 GMT

Metal Last Change Pct chg YTD pct chg Volume

Spot Gold 1632.24 9.29 +0.57 14.99

Spot Silver 30.33 0.43 +1.44 -1.72

Spot Platinum 1514.24 -10.26 -0.67 -14.33

Spot Palladium 603.50 -6.28 -1.03 -24.52

TOCOM Gold 4048.00 33.00 +0.82 8.55 42498

TOCOM Platinum 3784.00 -45.00 -1.18 -19.42 8018

TOCOM Silver 74.20 -2.20 -2.88 -8.40 362

TOCOM Palladium 1502.00 -58.00 -3.72 -28.37 2993

COMEX GOLD DEC1 1634.70 12.40 +0.76 15.01 7719

COMEX SILVER DEC1 30.38 0.30 +0.99 -1.81 4240

Euro/Dollar 1.3322

Dollar/Yen 76.97

TOCOM prices in yen per gram. Spot prices in $ per ounce.

COMEX gold and silver contracts show the most active months

DATA/EVENTS

0400 Russia Manufacturing PMI Sep 2011

0500 India HSBC Markit Mfg PMI Fin Sep 2011

0743 Italy Markit/ADACI Mfg PMI Sep 2011

0753 Germany Markit/BME Mfg PMI Sep 2011

0758 EZ Markit Mfg PMI Sep 2011

1400 U.S. ISM Manufacturing PMI Sep

1400 U.S. Construction spending Aug

PRICES

Precious metals prices 0012 GMT

Metal Last Change Pct chg YTD pct chg Volume

Spot Gold 1624.89 1.94 +0.12 14.47

Spot Silver 30.27 0.37 +1.24 -1.91

Spot Platinum 1518.24 -6.26 -0.41 -14.10

Spot Palladium 605.47 -4.31 -0.71 -24.27

TOCOM Gold 4037.00 22.00 +0.55 8.26 28277

TOCOM Platinum 3798.00 -31.00 -0.81 -19.12 4482

TOCOM Silver 74.20 -2.20 -2.88 -8.40 214

TOCOM Palladium 1499.00 -61.00 -3.91 -28.52 1933

COMEX GOLD DEC1 1626.90 4.60 +0.28 14.46 3141

COMEX SILVER DEC1 30.30 0.21 +0.70 -2.08 1432

Euro/Dollar 1.3358

Dollar/Yen 77.11

TOCOM prices in yen per gram. Spot prices in $ per ounce.

COMEX gold and silver contracts show the most active months