* All precious metals on course for yearly increases
* Palladium biggest price gainer for the year at 21 pct
* GRAPHIC-2016 metal returns tmsnrt.rs/2eqHKkL
(New throughout, updates prices, adds annual milestones,
comments, NEW YORK dateline, byline)
By Devika Krishna Kumar and Clara Denina
NEW YORK/LONDON, Dec 30 Gold prices eased on
Friday as gains from a weak dollar was offset by profit-taking
at the end of a year in which bullion gained about more than 8
percent, snapping three years of declines.
In the first half of 2016, investors increased gold exposure
as the Federal Reserve showed caution on raising interest rates
due to concerns about global growth, while Britain's vote to
leave the European Union curbed appetite for risk and pushed the
metal to a two-year high in July.
Spot gold reached its highest since Dec. 14 at
$1,163.14 an ounce, before retreating 0.7 percent to $1,150.5
per ounce. Prices were up about 8.5 percent annually, its
biggest increase since 2011.
U.S. gold futures ended the session 0.6 percent
lower at $1,151.7 per ounce.
Gold prices fell more than 8 percent in November, on higher
U.S. Treasury yields after Donald Trump's presidential election
win led to speculation his commitment to infrastructure spending
would spur growth.
Bullion hit a 10-month low on Dec. 15 as solid U.S. economic
data gave the Fed the confidence to raise rates for the first
time in a year. The central bank signalled three more increases
next year from the previous projection of two.
"Because the stock market has been flirting with the 20,000
range, it's been relatively calm and we haven't gotten the
flight to safety trade that we sometimes get with gold," said
Jeffrey Sica, president and chief investment officer of Sica
"Still we are building a position in gold primarily because
we think the stock market is going to hit some turbulence ...
and a major calamity coming out of Europe that's going to cause
a lot of money to go into the gold markets."
The precious metal is often seen as a hedge against
The dollar pared some losses against a basket of six
currencies as the session progressed, pressuring gold. U.S.
Treasury yields will remain a key driver for gold's movements,
Returns from U.S. bonds are closely watched by the gold
market, given that the metal pays no interest.
Other precious metals were also set to end the year in
positive territory, with palladium the best performer,
up more than 21 percent in 2016. It was up 1.3 percent on the
day at $680.75 an ounce.
Platinum gained 0.1 percent to $898.55 for the
session and rose marginally for the year, its first annual gain
in four years.
The spread between platinum and palladium contracted to its
narrowest in nearly 15 years earlier this month at $141 an
ounce, as palladium, mostly used in autocatalysts, benefited
from higher car demand in China and the United States and
"A sharply widening deficit ... is likely to propel
palladium higher as scope for mine output remains limited and
industrial and auto demand firm," HSBC said in a note.
Silver was down 1.4 percent at $15.92, but ended the
year about 15 percent higher, its best year since 2010.
(Additional reporting by Swati Verma in Bengaluru; Editing by