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 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.

With the U.S. currency reaping the benefit from the euro's decline, gold priced in dollars fell 0.4% 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 rose 0.1% 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 was at 1,004.73 euros an ounce, up about 0.2% 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.

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, have fallen by 1.5%.

"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 neighbor since the Korean War ended in 1953.

The dollar and U.S. Treasury prices rose, while European equities and U.S. stock futures declined. 

"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 program.

Spot silver fell by more than 2% to $27.22 an ounce, as the precious metals complex remained under pressure, although holdings of metal in the iShares Silver Trust, the world's largest physically-backed exchange-traded fund, hit a record high.

Platinum fell by 1.6% to $1,634.74 an ounce, while palladium was down by 4.2% at $661.72.