* U.S. data encourages risk appetite, gold eases
* Focus still on euro zone debt crisis
* Correlation to dollar erodes
(Updates throughout with comment, details, refreshes prices)
By Amanda Cooper
LONDON, Nov 24 (Reuters) - Gold fell on Wednesday after two
days of gains as U.S. data allayed some concern about growth,
while fears over the risk Ireland's debt crisis poses to other
euro zone economies sent gold in euros to five-month highs.
U.S. data showed consumer inflation fell to a record low
last month, while spending rose and consumers' mood improved.
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The dollar fell against a basket of currencies <.DXY>,
reflecting a degree of risk appetite among investors, who pushed
up the euro for the first time in three days.
While this would normally boost gold, the metal's
traditional inverse relation to the U.S. currency is at its
lowest in two months, meaning it is more likely to move in
tandem with the greenback.
Spot gold <XAU=> fell 0.2 percent to $1,373.95 an ounce by
1552 GMT, down from an earlier session high at $1,381.30, while
U.S. gold futures <GCZ0> fell $3.4 to $1,374.20.
The euro recovered from two-month lows on Wednesday as
investors shook off some of the fear that has driven spreads on
peripheral euro zone bonds such as Portugal and Spain to record
highs, which in turn briefly sent gold priced in euros
<XAUEUR=R> to its highest level since early June.
"I do think, however you look at it, it's going to have rest
and a consolidation for a while, and as we speak, it trades
(near) an all-time high in non-dollar terms," said Charles
Morris a fund manager at HSBC Global Asset Management.
Gold's negative correlation to the dollar reached its
weakest since mid-September as investors ditched the euro and
other risk-related assets such as stocks and corporate debt.
"Gold's been gritting its teeth in the last couple of days
and going contrary to what one might have expected with the
dollar move, and really that has to boil down to the
uncertainty," said Ole Hansen, a senior manager at Saxo Bank.
"We've got political risk from the Korea situation and then
more importantly ... people are talking about the potential of
the euro not surviving. I don't see that happening, but just the
fact that it is being talked about is enough to raise the bar."
An exchange of military fire between North and South Korea
on Tuesday has further unsettled investors, putting Asian stocks
under pressure and encouraging a sweep into perceived safe
havens such as gold, government bonds and the Swiss franc.
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PAIN
In Ireland, the government unveiled a four-year austerity
plan on Wednesday imposing deep spending cuts and tax increases
to help pay for a bank crisis and meet the terms of an EU/IMF
rescue. []
In terms of factors fuelling a bid for safe-haven
investments, Michael Widmer, a strategist with Bank of
America-Merrill Lynch, said the euro zone debt crisis was the
dominant one.
"If you go back through the past 10 or 20 years, you look at
how gold prices react to geopolitical uncertainty, those
uncertainties were relatively positive. But you don't tend to
see a sustainable impact on prices if it's just a one-off, and
that is probably the same thing this time around as well," he
said, referring to the tensions between the two Koreas.
Holdings of gold in the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust <GLD>, were unchanged
for a second day, indicating no large-scale withdrawal from gold
by investors.
Silver <XAG=> fell 0.2 percent on the day to $27.40, even as
holdings of silver in the world's largest physically-backed
exchange-traded fund rose to a third consecutive record high,
indicating robust demand for an alternate investment from gold.
[]
Platinum <XPT=> rose 0.9 percent to $1,661.74 an ounce,
recovering from two straight days of declines, while palladium
<XPD=> broke a two-day decline and rose 1.2 percent to $694.47.
(Editing by Sue Thomas)
