PRECIOUS-Gold on track for best year in over a decade

Adds comment, updates with mid-session trading

By Rahul Paswan

Dec 31 (Reuters) - Gold prices were little changed on Tuesday, the last trading day of an eventful year that saw the metal post its best annual performance in more than a decade.

Spot gold XAU= rose 0.1% at $2,608.09 per ounce, as of 0217 GMT. U.S. gold futures GCcv1 gained 0.1% to $2,620.60.

Trading activity is expected to remain quiet on the last day of the year.

"Gold enjoyed a stellar year in 2024 and much of that move higher was predicated on the expected transition towards a lower interest rate environment," said Tim Waterer, chief market analyst at KCM Trade.

Central bank buying, policy easing and geopolitical tensions propelled bullion to multiple record highs this year, setting the metal on track for its best performance since 2010, with a more than 26% increase year-to-date.

The market now awaits a fresh set of catalysts, including a slew of U.S. economic data due next week that could influence the interest rate outlook for 2025, and President-elect Donald Trump's tariff policies.

For 2025, "the U.S. interest rate outlook will remain a primary driver of the gold price. Trump's trade policies will be key in shaping the inflationary picture, the Fed's interest rate trajectory, and in turn, the gold price," Waterer said.

Federal Reserve's policymakers this month cut their 2025 rate forecast to 50 basis points of cuts from 100 bps and Fed Chair Jerome Powell said more reductions now hinge on further progress in lowering inflation.

Bullion is considered a hedge against inflation and turmoil but high rates reduce the non-yielding asset's appeal.

"Going into 2025, I think the trend is bullish and fundamentals constructive for gold, which I believe ought to challenge record highs again," said Kyle Rodda, financial market analyst at Capital.com.

Spot silver XAG= steadied at $28.98 per ounce and palladium XPD= added 0.5% to $908.25, while platinum XPT= was flat at $900.71.

Silver was headed for its best year since 2020, while platinum and palladium were set for annual losses.

(Reporting by Rahul Paswan in Bengaluru; Editing by Sumana Nandy)

((RahulKumar.Paswan@thomsonreuters.com ; If within U.S. +1 646 223 8780;;))