(Updates with comment, refreshes prices) * Prices subside from earlier two-week high * European Central Bank lifts rates by 25 bps * Coming up: U.S. June non-farm payrolls; July 8 1230 GMT By Amanda Cooper and Jan Harvey LONDON, July 7 (Reuters) - Gold prices held just below $1,530 an ounce on Thursday after the European Central Bank signalled it would continue to raise rates and offered to help Portugal stay solvent, although this did little to dispel concern about the euro zone's debt problem. The ECB raised its benchmark refinancing rate by 25 basis points to 1.50 percent, as markets had widely anticipated, and President Jean-Claude Trichet signalled in the post-meeting news briefing the bank would continue to tighten policy to prevent inflation from undermining economic growth. Spot gold was bid at $1,526.60 an ounce at 1425 GMT against $1,527.50 late in New York on Wednesday. U.S. gold futures GCv1 for August delivery fell $1.60 to $1,527.70. Prices had climbed as high as $1,534.20 an ounce, their highest since June 23, recovering from two consecutive weeks of losses. "Obviously the situation has deteriorated somewhat, but I don't think the risk aversion has been acute enough to see the safe-haven inflows (into gold) that we saw last year surrounding Greece," said RBS analyst Daniel Major. "The rate hikes we see - a slow gradual increase in the future aren't nearly enough to drive people out of gold and into higher-yielding assets ... It's having a negative impact today, but I think that is in part because of the moves in the currency," he said. The euro pared losses against the dollar after the ECB raised rates but said it would commit to keep providing Portugal with liquidity following rating agency Moody's shock downgrade to the country's sovereign debt to junk status earlier this week. Concerns over debt levels in some smaller euro zone economies, including Greece, Portugal and Ireland, were a key factor pushing gold prices to record highs above $1,575 an ounce in May. LOW RATES SUPPORT GOLD While rising interest rates typically weigh on gold, expectations that the ECB will lift rates more quickly than the U.S. Federal Reserve are supportive of the precious metal, which tends to benefit from a weaker dollar. "We continue to consider the gold market to be "under-bought" relative to the level of U.S. real interest rates, and expect current low real rates to motivate a rise in net speculative positions, providing support for a further rally in gold prices," said Goldman Sachs in a note on Thursday. It added, however: "We continue to expect gold prices to peak in 2012 as U.S. real interest rates rise with the ongoing economic recovery, and the potential for U.S. real interest rates to rise more quickly than we anticipate presents a downside risk to gold prices." On the supply side of the market, talks between striking Indonesian workers at the world's biggest gold mine and Freeport McMoRan Copper & Gold's management have broken down, leaving mining still halted, a government official said on Thursday. Silver was up 1.2 percent at $36.30 an ounce. The gold:silver ratio -- the number of ounces of silver needed to buy and ounce of gold -- stood at around 42.5 on Thursday, well above April's 28-year low of 31.7, meaning silver has become less expensive compared to gold as prices of both have retreated. "While we believe silver could continue to outperform other precious metals, we are concerned about persistent levels of volatility and damage to technical indicators and sentiment. Consequently, we maintain our preference for gold in the short term," said Morgan Stanley in a note. Spot platinum was up 0.6 percent at $1,731.24 an ounce, while spot palladium was up 2.0 percent at $778.00 an ounce. (Editing by William Hardy)

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