* Safe-haven bids on geopolitical tensions, euro zone woes
* North Korea artillery hits S. Korean island, kills two
* Coming up: U.S. FOMC Nov 2-3 meeting minutes at 1900 GMT
(Recasts, updates with comments, market activity, adds second
byline/dateline, previously LONDON)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, Nov 23 (Reuters) - Gold rose to a
seven-session high on Tuesday, as rising tensions on the Korean
peninsula and mounting worries over a European debt crisis
prompted investors to buy both the metal and the U.S. dollar as
safe havens.
Gold traded lower through much of the European day on
selling pressure related to expiring options at the $1,370
strike. Gold broke higher as traders saw heightened risks in
both Europe and the Koreas, with some traders appearing to
target the $1,400 mark.
"Gold's up on sovereign risk issues, worries over Ireland,
and also the Korean incident, which prompted investors to buy
gold and the dollar simultaneously, and that's why the U.S.
bond yields are falling," said James Steel, chief commodity
analyst at HSBC.
U.S. gold futures <GCZ0> rose 1.6 percent to $1,380.10 in
active trading. With risk aversion running high, the typical
inverse correlation to the dollar collapsed, with the one-day
average hourly gold/dollar correlation turning positive for the
first time since September, data showed.
North Korea fired artillery shells at South Korea, and
investors seeking safety pushed the dollar up by more than 1
percent against a basket of major currencies <.DXY>, while gold
<XAU=> rose 1 percent to $1,380 at 12:53 p.m. EST (1753 GMT).
U.S. Treasury debt prices, which move inversely with yields,
climbed on flight-to-safety buying. [] []
Spot silver <XAG=> fell 0.8 percent to $27.59 an ounce amid
unusually active futures trading. Holdings of metal in the
iShares Silver Trust <SLV>, the world's largest physically
backed exchange-traded fund, hit a record high.
[]
COMEX gold option floor trader Jonathan Jossen said futures
prices rose slightly on expiration of the popular COMEX
December options, whose open interest was the highest among the
$1,350 calls and $1,400 calls.
One trader at a European bank said there were "some big
(gold) strikes around $1,370 and that meant that...there was
plenty of selling in the market around those levels, so that
was putting a bit of a cap on it.
"We've now gone through that option expiry, it looks like
the selling's disappeared and we could have a chance to move
higher this afternoon," the trader added.
KOREAN PENINSULA IN FOCUS
North Korea fired scores of artillery shells at a South
Korean island, killing two soldiers in a sharp escalation of
hostilities. []
The euro <EUR=> came under pressure on mounting fears that
Ireland's debt crisis could spread to other members of the euro
zone such as Portugal and Spain and amid signs the Irish
government will have trouble passing an austerity budget.
German Chancellor Angela Merkel said the crisis in Ireland
crisis was different from the one in Greece but just as
worrying and the euro was in an "exceptionally serious"
situation.
The traditional inverse relationship between gold and the
dollar loosened, echoing events of May this year, when Greece
asked for financial aid and bullion's relation to the dollar
turned strongly positive as investors shed holdings of euros.
A common gauge for risk, the CBOE Volatility Index <.VIX>
jumped 15 percent as rising tensions in the Korean peninsula
added to worries about global economic conditions.
Until this week, strength in the U.S. dollar pressured
gold, especially following upbeat manufacturing and jobless
data last week that suggested the U.S. economy was recovering
faster than expected.
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.
[]
With the U.S. Thanksgiving holiday this week, 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 buyback program.
Platinum <XPT=> fell by 0.4 percent to $1,654.24 an ounce,
while palladium <XPD=> was down by 1 percent at $684.22.
Prices at 1:25 p.m. EST (1825 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1377.90 20.10 1.5% 25.7%
US silver <SIZ0> 27.625 0.159 0.6% 64.0%
US platinum <PLF1> 1660.00 4.50 0.3% 12.8%
US palladium <PAZ0> 687.35 2.65 0.4% 68.1%
Gold <XAU=> 1378.25 12.16 0.9% 25.7%
Silver <XAG=> 27.63 -0.19 -0.7% 64.1%
Platinum <XPT=> 1654.74 -5.26 -0.3% 12.9%
Palladium <XPD=> 684.47 -6.50 -0.9% 68.8%
Gold Fix <XAUFIX=> 1377.50 16.50 1.2% 24.8%
Silver Fix <XAGFIX=> 27.31 -11.00 -0.4% 60.7%
Platinum Fix <XPTFIX=> 1640.00 22.00 1.3% 11.9%
Palladium Fix <XPDFIX=> 674.00 11.00 1.6% 67.7%
(Additional reporting by Elizabeth Fullerton in London;
Editing by David Gregorio)
