* Fed upholds aggressive monetary policy
* Euro, European shares fall on Cyprus uncertainty
* Spot gold hits highest since Feb 26 at $1,616.36/oz (Updates prices, adds comments)
By Clara Denina
LONDON, March 21 (Reuters) - Gold rallied to its highest in almost a month on Thursday as nervousness over the debt crisis in Cyprus and a U.S. Federal Reserve pledge to stick with loose monetary policy fuelled interest in the metal .
Spot gold hit its highest since Feb. 26 at $1,616.36 an ounce and was later at $1,614.24 by 1452 GMT, still up 0.5 percent. The metal has broken the mid-February trendline resistance around $1,613 on price charts, suggesting scope for further gains, according to technical analysts.
U.S. gold futures for April delivery also hit a session high of $1,616.50. They were last seen up 0.4 percent at $1,613.80.
"We may have seen some technical momentum gathering in the past hour or so but we are generally seeing a lot of arguments in favour of gold today, with the Fed reiterating they will continue their quantative easing and the uncertainty in Cyprus," Commerzbank analyst Daniel Briesemann said.
The European Central Bank gave Cyprus until Monday to raise billions of euros to clinch an international bailout or face losing emergency funds for its crippled banks and inevitable collapse. Meanwhile, the country extended a bank lockdown to next week and turned to Russia for a lifeline.
Traders said the metal will have to break above $1,620 to possibly have a further $20 move on the upside.
"A break above $1,620 would probably give us a $20-$25 move but now with uncertainty around what is going to happen in Cyprus the market may struggle to push through that level," Saxo Bank senior manager Ole Hansen said.
Gold was also underpinned by the Fed's comments that it would press on with aggressive policy stimulus, despite improvement in the U.S. economy.
The Fed's quantitative easing has helped gold stage a record-breaking rally in recent years, but signs of economic recovery in the past few months raised worries that the central bank would wind the policy down sooner than expected, contributing to liquidation from gold exchange-traded funds.
In wider markets, the dollar firmed against the euro and European shares fell across the board as disappointing German data suggesting Europe's largest economy would eke out meagre growth this quarter.
Asia's physical gold market was quiet as buyers moved to the sidelines after prices broke above $1,600 earlier this week.
As a gauge of investor interest, holdings of SPDR Gold Trust , the world's biggest gold-backed exchange-traded fund, stood unchanged from a day earlier at 1,222.162 tonnes on Tuesday, after posting the first daily inflow since early February in the previous session.
Precious metals with industrial applications firmed slightly, tracking the strength in base metals, after data showed a pickup in the growth of China's vast manufacturing sector.
Spot silver gained 1.5 percent to $29.19, having reached a one-week high of $29.32 earlier. Platinum rose 0.3 percent to $1,579.74 and palladium was unchanged at $756.72.
Switzerland's palladium exports jumped last month to their highest since September 2008, Swiss customs office data showed, while the country became a net importer of platinum after exports fell to a six-month low. (Additional reporting by Rujun Shen in Singapore; Editing by Veronica Brown and Anthony Barker)
