PRECIOUS-Gold set to end volatile 2020 with strong gains; silver outperforms

(Recasts, adds comments, updates prices)

* Silver up 48% this year, on track for best year since 2010

* Palladium up for fifth year, gaining over 25% in 2020

* Platinum eyes second straight annual gain

* Interactive graphic tracking global spread of coronavirus: tmsnrt.rs/3mvcUoa

Dec 31 (Reuters) - Gold gained as the dollar extended losses on Thursday, with the metal on track for its best year in a decade on economic uncertainty and as governments worldwide doled out massive stimulus to offset the impact of the coronavirus pandemic.

Spot gold was up 0.1% at $1,895.81 per ounce by 10:16 a.m. EST (1516 GMT). U.S. gold futures gained 0.4% to $1,900.10.

Bullion has gained 25% so far in 2020 as global central banks and governments turned on their stimulus taps, laying the ground for higher inflation and currency debasement.

The U.S. Federal Reserve will remain extraordinarily accommodative through 2022 and an increasingly progressive Democratic Party is looking to borrow and spend aggressively, said Tai Wong, head of base and precious metals derivatives trading at BMO.

“Based on that, the U.S. dollar has been slumping badly and can’t manage any rally, which is bullish gold,” he said. “However, if the vaccine really is effective and we have the pandemic beat by summer, that may limit gold gains.”

The non-yielding metal is regarded as a hedge against the inflation that is likely to result from record fiscal stimulus and ultra-dovish monetary policies.

Outperforming gold this year with a 48% gain, its strongest performance since 2010, spot silver was however down 0.6% at $26.45 an ounce on Thursday.

“We forecast further silver outperformance in 2021 on the basis of additional tailwinds from the green transformation driving increased industrial demand, together with the expected economic recovery benefiting silver more than gold,” said Saxo Bank analyst Ole Hansen.

Palladium looked set to post gains for a fifth consecutive year, having risen over 25% in 2020, while platinum is on track to record a second straight yearly rise, climbing just over 11%.

Palladium gained 2.9% to $2,430.68 and platinum was up 0.3% to $1,069.04.

Both the metals are used by automakers in catalytic converter manufacturing to clean car exhaust fumes.

With consumers opting for single-family vehicles over public transport, platinum group metals will benefit from a recovery in global auto sales, tightening emission standards, and strong Chinese imports, said Axi chief global market strategist Stephen Innes.