PRECIOUS-Gold set for best year in nearly half a century, silver heads for largest annual gain

Dec 31 (Reuters) - Gold and silver both traded lower on Wednesday, but were on track for unprecedented milestones as the year approaches its close, while other precious metals also made impressive gains. FUNDAMENTALS Spot gold (XAU=) was down 0.3% at $4,334.20 per ounce as of 0032 GMT, after hitting a record high of $4,549.71 on Friday. U.S. gold futures (GCcv1) for February delivery lost 1% to $4,346.50/oz. The U.S. dollar (.DXY) rose to a more than one-week high in the previous session, making greenback-priced bullion more expensive for other currency holders. (USD/) Bullion has staged a stellar rally in 2025, climbing 66% so far, in what looks to be its largest annual gain since 1979, the year of the Iranian revolution. Interest rate cuts and bets of further easing by the U.S. Federal Reserve, geopolitical conflicts, robust demand from central banks and rising holdings in exchange-traded funds have fueled gold’s rally this year. The U.S. Federal Reserve agreed to cut interest rates at its December meeting only after a deeply nuanced debate about the risks facing the U.S. economy right now, according to minutes of the latest two-day session. The Fed next meets on January 27-28, with investors currently expecting rates to be left unchanged. (FEDWATCH) Non-yielding assets tend to do well in a low-interest-rate environment. Spot silver (XAG=) fell 2.7% to $74.41 per ounce, after hitting an all-time high of $83.62 on Monday. Silver has gained 157% year-to-date, far outpacing gold, and set for its best year ever recorded. The metal broke through multiple important milestones for the first time, propelled by its designation as a critical U.S. mineral, supply constraints and low inventories amid rising industrial and investment demand. Spot platinum (XPT=) shed 3.4% to $2,123.55 per ounce, after rising to an all-time high of $2,478.50 on Monday, and was also set for its best year ever, having climbed 135%. Platinum’s rally has been fuelled by the EU’s U-turn on its 2035 combustion-engine ban, a tight supply backdrop and rising investment demand for precious metals. Palladium (XPD=) fell 1.6% to $1,584.67 per ounce, set to close the year up 74%, its best in nearly 15 years.