PRECIOUS-Gold steadies as weak euro offsets Korea shelling

                                
 * North Korea artillery hits S. Korea island
                                
 * Gold in euros may outperform dollar-denominated bullion
                                
 * Coming up: U.S. FOMC Nov 2-3 meeting minutes; 1900 GMT
                                
 
                                
 (Adds comment, details; updates prices; pvs SINGAPORE)
                                
 By Amanda Cooper
                                
 LONDON, Nov 23 (Reuters) - Gold held near one-week highs on
Tuesday as weakness in the euro stemming from the ongoing
European debt crisis offset any potential price gains from a
major exchange of artillery fire on the Korean peninsula.
                                
 Conviction is growing in the financial markets that the
European Union's joint bailout of Ireland with the IMF will not
be enough to quash fears that Portugal and possibly Spain could
become the next target of fixed-income investors' anxiety.
                                
 Canada's finance minister said on Monday he was pressing the
European Union to address the Portuguese debt crisis quickly,
although he fell short of saying the country would need a
bailout like Ireland. [ID:nN22292493]
                                
 The euro <EUR=> remained under pressure as the coalition
government in Dublin looked to be facing a struggle to pass an
austerity budget that is a condition of financial aid.
                                
 With the U.S. currency reaping the benefit from the euro's
decline, gold priced in dollars <XAU=> dipped 0.1 percent to
$1,364.40 an ounce at 1000 GMT, versus $1,366.09 late on Monday
and down from a session high of $1,369.75. U.S. gold futures
<GCZ0> rose 0.4 percent to $1,364.10.
                                
 "We do continue to see positive buying, initially out of
Asia. We think that will continue throughout December, so that
is supporting gold," said Standard Bank analyst Walter de Wet.
                                
 "The sovereign debt issues, we thought, should support gold,
but given that, gold in euros has performed better than gold in
dollars," he added.
                                
 Gold priced in euros <XAUEUR=R> was at 1,004.78 euros an
ounce, up about 0.2 percent on the day, having broken through
the 1,000-euros mark on Monday for the first time in a week.
                                
 Gold's traditional inverse relation to the U.S. dollar broke
down in May this year when the euro zone's debt problems became
apparent, prompting investors to dump the single European
currency.
                                
 
                                
 LINK IN PLACE
                                
 This time around, this inverse link has remained, meaning it
has been harder for gold to attract much in the way of
safe-haven flows. Speculators in New York have cut their
exposure to gold futures by 4 million ounces in the last month.
                                
 Indeed, holdings of gold in the world's largest
exchange-traded fund, the SPDR Gold Trust <GLD>, have fallen by
1.5 percent since ratings agency Fitch cut Ireland's credit
rating in October and the country's bond yields began climbing.
                                
 "The difference now is, back in May when these issues first
appeared, no one really knew how the EU and the ECB would deal
with that," de Wet said.
                                
 "Now there is a precedent in that people know there is
support for a bailout. Ireland has been bailed out, Greece has
been bailed out and if there's more problems, there will be more
bailouts," he said.
                                
 Fanning geopolitical tensions, North Korea on Tuesday fired
dozens of artillery shells at a South Korean island, setting
buildings on fire and prompting a return of fire by the South,
Seoul's military and media reports said. [ID:nL3E6MN09Z]
                                
 The dollar and U.S. Treasuries rose and U.S. stock futures
fell on Tuesday. [MKTS/GLOB] [USD/]
                                
 "This is a trigger for the 'risk off' button. You'll 
certainly see selling in risk-based markets like equities and 
commodities until we get a better read on events," Mark Pervan,
senior commodities analyst at ANZ in Melbourne.
                                
 "There should be reasonable support for gold although we
often see a firmer dollar as the initial reaction to risk and
lower gold prices, but industrial metals might get hit, oil,
too."
                                
 With the U.S. Thanksgiving holiday around the corner,
investors are watching for a batch of data, as well as minutes
from the Federal Reserve's meeting on Nov 2-3, where the Fed
decided to launch its $600 billion bond purchase programme.
                                
 Spot silver <XAG=> fell 0.7 percent to $27.62 an ounce.
                                
 Holdings in the iShares Silver Trust <SLV>, the world's
largest physically-backed exchange-traded fund, hit a record
high of 10,841.98 tonnes by Nov 22. [ID:nSGE6AL0SG]
                                
 Platinum <XPT=> fell by 0.2 percent to $1,657.50 an ounce,
while palladium <XPD=> was down by 1.7 percent at $679.47.
(Reporting by Amanda Cooper; Editing by Alison Birrane)