Gold rose more than half a percent on Monday with investors chasing the precious metal as the euro weakened against the U.S. dollar on concerns over euro zone debt and Ireland's bailout package. Tensions on the Korean peninsula following Seoul's plan to go ahead with live firing drills from a disputed island near the disputed northern border offered additional support. But dealers expect slow trading ahead as the year-end nears. Spot gold [XAU=X 1383.25 10.25 (+0.75%) ] added $10.90 an ounce to $1,383.90 an ounce in Asian trade, but it was still well below an historical high around $1,430 hit earlier this month. U.S. gold futures [GCG1 1384.1 4.90 (+0.36%) ] rose $3.4 an ounce to at $1,382.6 an ounce. Bullion has risen as much as 30 percent this year. "Last week's EU summit between policy makers did not address investor concerns aggressively enough and this was unable to really calm markets. Gold prices could be underpinned by persistent euro zone debt concerns," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore. "Perhaps we could see a new high in gold prices in 2011. For this year, I think as we head towards the year-end, investors may unwind positions and trading volume is coming down." The European Central Bank has expressed "serious concerns" that Ireland's bailout package could affect the institution's liquidity operations in the euro zone. The euro slid to a two-week low on Monday, looking vulnerable to more losses against the dollar after breaching chart support on Friday. It was within reach of support at $1.3100-3090, a retracement level and its 200-day moving average. Some dealers in Hong Kong saw physical buying related to the tensions on the Korean peninsula, which could escalate into war. The U.S. the U.S. envoy to the United Nations Susan Rice said disagreements on the U.N. Security Council over the crisis are so severe that it is unlikely they can be resolved. "There's a little bit of buying by investors here. People are cautiously bullish. People are still talking about high inflation everywhere next year," said a dealer in Hong Kong. "Gold will move upward, with upside target around $1,390," said the dealer, referring to a high seen last week. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust [GLD 134.20 0.39 (+0.29%) ], said its holdings rose to 1,298.940 tonnes by Dec 17 from 1,283.757 tonnes on Dec 16. The holdings hit a record at 1,320.436 tonnes on June 29. iShares Silver Trust [SLV 28.5075 0.2275 (+0.8%) ], the world's largest silver-backed exchange-traded fund, said its holdings dropped to 10,903.34 tonnes by Dec 17 from a record of 10,964.14 tonnes on Dec 14. Japan's Nikkei was flat for a fifth straight session on Monday, not far below a seven-month closing high hit last week, as investors lacked strong trading incentives and volume was set to edge lower as the year-end nears.

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