* Gold holds on to bulk of Thursday's 2 percent gain
* Inflows seen into largest gold-backed ETF
* GRAPHIC-Gold vs currencies: link.reuters.com/cyv95s (Updates prices; adds comment, second byline, NEW YORK dateline)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, Feb 19 (Reuters) - Gold eased on Friday as investors cashed in some of the previous day's 2 percent gains, though expectations that rock-bottom interest rates would persist served to keep prices above $1,225 an ounce.
Spot gold was down 0.04 percent at $1,231.43 an ounce at 2:40 p.m. EST (1940 GMT), and was on track to finish the week down 0.5 percent, its first week down in five weeks.
U.S. gold futures for April delivery settled up 0.4 percent to $1,230.80.
Prices remain up nearly 16 percent so far this year, with turmoil in the wider financial markets fuelling interest in the metal as a store of value while reducing the likelihood of further interest rate rises by the U.S. Federal Reserve.
That is continuing to underpin gold as it consolidates below last week's one-year high of $1,260.60.
"Momentum is strong. Yesterday gold moved up even when the dollar was stronger, so for me that signals that it is mainly central bank-policy driven," ABN Amro analyst Georgette Boele said.
Gold tends to benefit from lower interest rates, which cut the opportunity cost of holding non-yielding assets.
"It just continues to build a base well above $1,200," said James Steel, chief metals analyst for HSBC Securities in New York.
"It's been quite impressive. It's actually ignored some bearish developments."
Rising rents and healthcare costs lifted underlying U.S. inflation in January by the most in nearly 4-1/2 years, signs of a pick-up in price pressures that could allow the Federal Reserve to gradually raise interest rates this year.
"Gold moved up pretty sharply and a period of reflection and sideways trading would seem appropriate," said Simon Weeks, head of precious metals at the Bank of Nova Scotia.
Global equity markets retreated but were off earlier lows as oil prices weakened, while short-dated U.S. bond prices rose after economic data raised the possibility of a U.S. rate hike this year.
Bullion has been supported by inflows into gold-backed exchange-traded funds (ETFs), holdings of which have already risen this year by more than they fell in the whole of 2015.
In the physical markets, Asian gold demand slowed this week with discounts in key consumer India at a record high.
Silver was down 0.05 percent at $15.40 an ounce.
The value of gold compared with silver reached its highest in more than seven years on Friday, with an ounce of gold worth 80 ounces of silver.
Platinum was down 0.1 percent at $942.30 and palladium dropped 0.9 percent to $495.75.
Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Goodman and Bernadette Baum