PRECIOUS-Gold eases as weak euro snuffs out safe-haven bid

                                
 * North Korea artillery hits S. Korean island
                                
 * Gold in euros may outperform dollar-denominated bullion
                                
 * Coming up: U.S. FOMC Nov 2-3 meeting minutes; 1900 GMT
                                
 
                                
 (Updates prices)
                                
 By Amanda Cooper
                                
 LONDON, Nov 23 (Reuters) - Gold eased on Tuesday as weakness
in the euro stemming from the 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.
                                
 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, while
Spanish bond yields rose, reflecting fears of contagion from the
Irish debt crisis. [ID:nLDE6AM14S]
                                
 With the U.S. currency reaping the benefit from the euro's
decline, gold priced in dollars <XAU=> fell 0.4 percent to
$1,360.15 an ounce by 1212 GMT, versus $1,366.09 late on Monday
and down from a session high of $1,369.75. U.S. gold futures
<GCZ0> rose 0.1 percent to $1,359.40.
                                
 "As for gold, the downside is likely to remain well
supported as uncertainty over euro zone economies remains and
further weakness in the single currency cannot be ruled out,"
said Andrey Kryuchenkov, analyst at VTB Capital.
                                
 "Should troubles in the monetary union escalate as optimism
over the Irish bailout evaporates, we could well see a renewed
run to gold's safe haven appeal."
                                
 Gold priced in euros <XAUEUR=R> was at 1,004.73 euros an
ounce, up about 0.2 percent on the day, having broken through
the 1,000-euro 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. The negative correlation between gold and the
dollar index <.DXY> has strengthened every day bar one in the
past week. 
                                
 Speculators in New York have cut their exposure to gold
futures by 4 million ounces in the last month and holdings of
gold in the world's largest bullion-backed exchange-traded fund,
the SPDR Gold Trust <GLD>, have fallen by 1.5 percent.
[GOL/SPDR]
                                
 "The difference now is, back in May when these issues first
appeared, no one really knew how the EU and the European Central
Bank would deal with that," said Standard Bank analyst Walter de
Wet.
                                
 "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, killing two
soldiers and setting dozens of houses on fire in one of the
heaviest attacks on its neighbour since the Korean War ended in
1953. [ID:nTOE6AM01Q]
                                
 The dollar and U.S. Treasury prices rose, while European
equities and U.S. stock futures declined. [FRX/] [US/] [.N]
                                
 "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.
                                
 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 by more than 2 percent to $27.22 an
ounce, as the precious metals complex remained under presssure,
although holdings of metal in the iShares Silver Trust <SLV>,
the world's largest physically-backed exchange-traded fund, hit
a record high. [ID:nSGE6AL0SG]
                                
 Platinum <XPT=> fell by 1.6 percent to $1,634.74 an ounce,
while palladium <XPD=> was down by 4.2 percent at $661.72.
 (Reporting by Amanda Cooper; Editing by Anthony Barker)