* Gold, silver in correction phase after rapid rally
* Spot gold may fall to $1,505 - technicals [ID:nL3E7G402U]
* Coming up:U.S. ISM Non-Manufacturing for April at 1400 GMT
(Recasts, updates prices, adds comment, pvs Singapore)
LONDON, May 4 (Reuters) - Silver futures fell for a third day on Wednesday and gold eased as precious metals came under pressure to correct after a strong rally in the last few weeks.
COMEX silver futures have lost 14 percent over the past four sessions, wiping out the gains of the previous three weeks that took the price to a 31-year top just below $50 on April 25.
U.S. July silver futures SIcv1 hit a near three-week low of $40.47 earlier before recovering to $41.66 an ounce by 0928 GMT, extending an 8-percent slide on Tuesday, when CME Group (CME.O) raised margin requirements on silver futures for the third time in a week.
Spot silver XAG= was bid at $41.68 versus $41.64 in New York on Tuesday.
"It seems to be the same price pattern we have seen in the last few days: the silver price retreats heavily overnight then almost recovers losses in early trading before it retreats again in later trading," Commmerzbank analyst Daniel Briesemann said.
"Generally speaking we still think that silver prices will come down quite significantly over the next few weeks. The price rise to the high at end-April was definitely exaggerated and a price correction was overdue, now it's going this way."
Spot gold XAU= was bid at $1,536.59 an ounce, having hit a record $1,575.79 an ounce on Monday, and compared with $1,540.38 the previous day. COMEX gold GCcv1 lost some 0.2 percent to $1,537.20. "Gold is dragged along with silver and is also under some pressure," Briesemann said.
Graphic on gold-silver ratio: link.reuters.com/jen39r
Technical outlook on gold [ID:nL3E7G402U]
FACTBOX on precious metals ETF holdings [GOL/ETF]
FACTBOX on China's rate hikes and RRR changes[ID:nTOE71H069]
CHINA INFLATION OUTLOOK
Silver is still one of the top-performing commodities of the year, having risen by almost 45 percent so far in 2011.
But investors remained wary of a market in almost chronic surplus and a highly volatile price.
Investment interest in silver ebbed, as holdings in the iShares Silver Trust (SLV), the world's biggest silver-backed exchange-traded fund, dropped to a seven-week low of 10,909.06 tonnes, 4 percent off the record high hit on April 25.
The gold-silver ratio, used to measure how many ounces of silver is used to buy an ounce of gold, rose to a one-month high of 37, from below 32 last week, its lowest since early 1980s.
Beyond the correction, gold and silver are expected to resume their upward trend, as worries about rising inflation and ongoing unrest in the Middle East and North Africa, as well as low U.S. interest rates may continue to drive investors to these precious metals, traders said.
Chinese inflation is expected to moderate in the second half of the year as government measures to curb price rises hit their mark, said a senior central bank official. [ID:nL3E7G403Y]
The statement is unlikely to dampen the long-term sentiment in gold, traders and analysts said.
The European Central Bank, which has raised interest rates last month, is expected to signal its readiness to hike rates again when it meets on Thursday. [ID:nLDE7420ZV]
Platinum XPT= was lower at $1,843.99 an ounce, while palladium XPD= fell more than 2 percent to $764.08.
(Additional reporting by Rujun Shen in Singapore; editing by Keiron Henderson)