* Safe-haven play before US bank stress test boosts gold
* Gold mining stocks jump over 4 pct on Wall St rally
* Gold/S&P ratio below key psychological level at under 1
(Recasts, updates with quotes, closing prices, details, adds
NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, May 6 (Reuters) - Gold rose on Wednesday
as stress tests on U.S. banks underscored lingering
uncertainties in the financial markets, bolstering the metal's
safe-haven appeal.
Gold traded higher in spite of a Wall Street rally ahead of
Thursday's release of results of government stress tests on 19
large U.S. banks.
"The issue over the bank stress testing is putting a
safe-haven bid into gold ...as uncertainties remain. Also, the
oil market is up, which at least is showing that there are some
activities" regarding inflation, said James Steel, chief
commodities economist at HSBC.
Spot gold <XAU=> traded at $909.85 an ounce at 2:21 p.m.
EDT (1821 GMT), up 0.7 percent from its late Tuesday quote of
$903.20 an ounce in New York.
U.S. gold futures for June delivery <GCM9> settled up $6.70
at $911.00 an ounce on the COMEX division of the New York
Mercantile Exchange.
U.S. oil futures <CLc1> rose above $56 a barrel, which
marked the highest level in 2009, increasing gold's appeal as a
hedge against inflation.
The dollar fell against the euro ahead of a rates
announcement from the European Central Bank on Thursday.
Gold is often bought as an alternative to the U.S. currency
and tends to move in the opposite direction to it. []
Societe Generale analyst David Wilson said, however, gold's
gains were being limited by perceptions that the worst of the
global economic downturn may be over.
"The increasing amount of non-negative economic news is
driving investors to look more favorably at equities, and even
base metals, and obviously that is going to be to the detriment
of gold," Wilson said.
"As more positive economic signals appear, there will be
less incentive to hold gold as a safe-haven play."
Wall Street, measured by the broad S&P 500 index <.SPX>,
rose nearly 2 percent on a bank rally, despite initial weakness
on news that Bank of America and Citigroup could need more
capital as a result of the stress test. []
Gold/S&P ratio, a gauge of gold's strength compared to
equities, fell below 1 as stocks keep climbing.
Gold mining stocks, measured by the Gold BUGS <.HUI>, or
Basket of Unhedged Gold Stocks, index, jumped over 4 percent on
the back of the bullion price rally.
SILVER AT SIX-WEEK HIGH
Silver prices tracked gold up to a six-week high of $13.81
an ounce. Data showed ETF Securities' Physical Silver
exchange-traded fund <PHAG.L> added nearly 200,000 ounces to
its reserves on Tuesday.
But holdings of the world's largest silver-backed ETF, the
iShares Silver Trust <SLV>, dipped for the first time in more
than a month, by just over 3.5 tonnes.
"The gains yesterday led the gold/silver ratio to its
lowest in over seven months, with the industrial metal looking
more positive from a technical view, having broken through its
February trendline," TheBullionDesk.com analyst James Moore
said.
"The target now is for silver to hold ground above $12.80
and to challenge overhead resistance from March highs around
$13.90 and February highs around $14.64," he added.
Silver <XAG=> was at $13.70 an ounce, up 2.7 percent from
its previous finish of $13.34.
Among other precious metals, spot platinum <XPT=> was at
$1,135.00 an ounce, up 0.8 percent from its late Tuesday quote
of $1,125.50, while spot palladium <XPD=> was at $226.50 an
ounce, up 3.7 percent from its previous finish of $218.50.
(Editing by Christian Wiessner)
