* 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)
By Renita D. Young and Jan Harvey
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. must find partners to build a coalition government after securing a fourth term as German chancellor. 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 XAU= was up 0.85 percent at $1,308.06 an ounce by 2:48 p.m. EDT (1848 GMT). It fell earlier as the German election results hit the euro.
U.S. gold futures GCv1 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 EUR= 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. FRX/ GVD/EUR
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. 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. GOL/AS
Silver XAG= 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 XPT= was up 0.90 percent to $938.90 an ounce after touching the lowest price since late July. Palladium XPD= was down 0.61 percent at $910.90 an ounce.