The entire precious metals complex had a stellar run in 2010, led by palladium's 97 percent rise and Silver's 83 percent gain. Gold yielded investors a 29.7 percent profit in 2010, the tenth consecutive annual gain in a row.

Gold rose to within $10 of its all-time record high on the last day of 2010, closing out an unprecedented winning streak as the combination of a weaker dollar and global economic uncertainty seemed to pave the way higher next year.

Spot silver, too, swept higher for an 83 percent gain on the year, as investors sought the white metal as an alternative to gold. It was the best-performing assets in the CRB, hitting a 30-year peak of $30.92 on Friday. The broader commodities rally pushed the 19-commodity Reuters-Jefferies CRB index .CRB up 15 percent in 2010.

Spot gold moved up to $1,418.85 an ounce by 2:22 EST, up 1.06 percent from the previous close at $1,403.99, and a 29.4 percent advance over 2009. Bullion prices were on track for their fifth straight month of gains, the longest stretch of monthly increases since late 2001.

U.S. February gold futures settled 2010 at $1,421.40 an ounce, up $15.50, or 1.1 percent, and marked a 29.7 percent gain over 2009's settlement when the active gold contract ended at $1,096.2 on the COMEX division of the NYMEX.

Friday's gains were spurred by the dollar's broad decline against a basket of currencies .DXY, as investors closed their books on 2010. But the U.S. currency still managed to end a volatile year a bit firmer.

The gold price remains well supported by a weaker dollar and solid investment demand, said Anne-Laure Tremblay, precious metals strategist at BNP Paribas.

We expect the gold price rally to continue into 2011 on the back of strong fundamentals, including inflationary pressures (notably in China), ample liquidity and concerns about the value of the dollar, she added.

Traders and analysts expect gold to break above $1,500 in 2011, particularly if the dollar extends its decline, the U.S. economy remains unable to generate enough jobs to lower unemployment and Europe's debt crisis is not diffused.

As for next year, I'm thinking gold could trade firmly over the next quarter or two. And then have the potential to see some weakness in the second half of the year, said Tom Pawlicki, precious metals analyst at MF Global in Chicago.

He said he thinks gold investors will remain focused on sovereign debt issues, and Chinese and central bank buying of gold, along with quantitative easing enhancing gold's luster.

But eventually those issues will get played out, he added and an increase in the negative real yields that have been benefited gold in 2010 could work against precious metals plays in 2011 as economic growth begins to pick up.

If short-term yields start rising because the economy gets better or because monetary policy gets normalized that may take away that negative yield argument for holding gold and add pressure later in the year, said Pawlicki.

Also tempering some of the enthusiasm, holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell to 1,280.722 tonnes by Dec 30, its lowest since early June.

Spot palladium surged to a nine-year high at $799.47 an ounce, and platinum, at $1,766.24, was up 20 percent on the year.

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