* Inflation concerns on signs of recovery boost gold
* Gold supported by weaker dollar after ECB cuts rate
* Platinum, palladium rise in line with industrial metals
(Updates with details, closing prices, adds NEW YORK to
dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, May 7 (Reuters) - Gold ended firmer on
Thursday as the prospect of traders buying bullion as an
inflation hedge supported the market, but gains were pared as
bets that the global slump could be stabilizing dented its
safe-haven cachet.
The more industrial precious metals -- platinum, palladium
and silver -- rose in line with oil and industrial metal
prices, which were in turn swept up by a global stock market
rally.
"The slower pace of deterioration is not only good for
equities but is helping the broad-based commodities story,"
said CMC Markets analyst Ashraf Laidi. "Commodities are really
rallying, they are really embracing this green-shoot
recovery."
Spot gold <XAU=> was at $911.05 an ounce at 3:11 p.m. EDT
(1911 GMT), up 0.1 percent from $909.90 an ounce, its late New
York quote on Wednesday.
In early sessions, it rallied to a five-week high of
$922.30 an ounce earlier as a break through the previous day's
high triggered buy orders.
U.S. gold futures for June delivery <GCM9> settled up $4.50
at $915.50 an ounce on the COMEX division of the New York
Mercantile Exchange.
The euro rose to a one-month high against the dollar after
the ECB opted to slash borrowing costs to a record low of 1
percent, as expected, and said it intends to buy
euro-denominated covered bonds. []
Gold largely held gains despite an initial Wall Street
rally fizzling as investors booked profits ahead of the results
of a closely watched government bank stress test. []
Dealers are now looking ahead to the results of stress
tests on 19 U.S. banks, which will be released at 5 p.m. EDT.
INFLATION
Standard Bank analyst Walter de Wet said expectations the
financial crisis was bottoming out may turn attention away from
gold as a haven, but boost its appeal as an inflation hedge.
"People who are bullish on gold would probably see this as
a time to buy because, if indeed the recovery is close, we
might see inflationary pressures creeping in sooner rather than
later," he said.
Investment demand for gold remained sluggish, with holdings
of the world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, declining 0.36 tonnes on Wednesday.
It has seen an outflow of 23.28 tonnes in the last four
weeks, compared with inflows of nearly 90 tonnes in the
preceding period.
The largest silver-backed ETF, the iShares Silver Trust
<SLV>, said its holdings declined 61.28 tonnes on Wednesday.
Silver prices rose to a new 10-week high of $14.13 an ounce
on Thursday, tracking gold higher. Spot silver <XAG=> was at
$13.90 an ounce, up 1.5 percent from its previous finish of
$13.70.
Among other precious metals, platinum <XPT=> traded at
$1,145.00 an ounce, up 1 percent from its late Tuesday quote of
$1,133.50, while palladium <XPD=> was at $235.00 an ounce, up
3.8 percent from its previous finish of $226.50. Earlier,
palladium rose more than 7 percent to a peak of $243, its
highest price since September.
Platinum and palladium are mainly used as components in
catalytic converters, and prices have dropped sharply since the
downturn sparked a drop in demand for cars.
(Editing by Christian Wiessner)
