Gold edges up as silver rises

SINGAPORE | Tue May 10, 2011 11:36pm EDT

(Reuters) - - Gold held steady and silver rose more than 1 percent on Wednesday, as concerns about China's high inflation and waning economic growth are seen buoying interest in precious metals.

China's inflation in April was stronger than expected, at 5.3 percent on the year, while industrial output was considerably weaker than forecast.

High inflation and lower economic growth in China, the world's second-largest economy, are likely to dampen risk appetite and support interest in gold, though reaction to the data was muted.
Spot gold inched up 0.4 percent to $1,521.49 an ounce by 0256 GMT, building on gains in the past three sessions.
U.S. gold edged up 0.3 percent to $1,521.60.

"Gold is generally benefiting from the return of confidence from investors," said Darren Heathcote, head of trading at Investec Australia.

"They are very happy buying on the dip, as we see the same old problems hanging around."
Growing concern over Greece's fiscal status, dollar weakness and high oil prices continues to fuel nervousness in the financial markets, driving investors to seek safe haven in bullion.

U.S. crude futures hovered near $104 a barrel after rising $1.33 in the previous session, supported by worries that flooding could hit the U.S. Gulf Coast refining hub as well as strong Chinese crude imports for April. <O/R>

While holdings in the SPDR Gold Trust remained unchanged at a one-year low, holdings in the iShares Silver 
Trust, the world's largest silver-backed exchange-traded fund, extended a rise of 3 percent in the previous session and edged up 0.2 percent to a one-week high of 10,585.99 tonnes by May 10.