PRECIOUS-Gold firms near 6-month peak; faces first yearly fall in three

(Updates prices, adds fresh comments)

* Gold and silver set for best month since January 2017

* Palladium the only 2018 gainer in precious complex

* Platinum suffers worst year since 2015

* GRAPHIC-2018 asset returns:

BENGALURU, Dec 31 (Reuters) - Gold traded near a more than six-month peak hit early on Monday but was headed for its first annual decline since 2015, having lost this year to dollar strength due to trade tensions and rising interest rates by the U.S. Federal Reserve.

Spot gold was up 0.1 percent at $1,281.25 an ounce at 2:30 p.m. EST (1930 GMT). It hit its highest since June 15 at $1,284.09 earlier in the session.

U.S. gold futures settled down 0.1 percent at $1,281.30 per ounce.

“We are starting to see signs of crack in the economic future of the global economy. So people are getting very concerned and are starting to put money back into gold,” said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York.

“Gold could reach the $1,400 mark this coming year,” he added.

Spot prices have gained about 5 percent so far this month, the most since January 2017, but are still down 1.6 percent in the year to date.

“Gold started well in 2018, but a recovery in the U.S. dollar weakened prices and uncertainty on the U.S-China trade front weakened the yuan, further pulling gold down,” said ABN AMRO analyst Georgette Boele.

Some stabilisation in the yuan and weakness in the dollar has helped the recent recovery in gold, she said, which has put the metal on track for its best December in a decade.

The dollar slipped 0.3 percent, but was set to close the year up nearly 5 percent against its rivals. Its strength helped send gold to a 20-month low in August. But the metal has since recovered about 10 percent.

Political and economic considerations will support prices in the first quarter of 2019, said Benjamin Lu Jiaxuan, commodities analyst at Singapore-based brokerage firm Phillip Futures.

The outlook for the dollar is also more subdued going into 2019, with growing expectations that a three-year rate-hiking cycle in the United States has come to a close. Markets currently expect no rate hikes next year.

In other trading, auto catalyst metal palladium rose 0.9 percent to $1,264.99 an ounce, taking its gain for the year to 19.2 percent and making it the best-performing of the major precious metals for the third year in a row.

This year it also surpassed gold for the first time since 2002 on strong demand from makers of catalytic converters.

“The key driver in this strength has been growing demand from the auto sector with stricter pollution standards in China increasing the amount of palladium used in auto catalysts,” ING said in its commodities outlook for next year.

Silver rose 0.7 percent to $15.44 an ounce in the session but was down 8.7 percent for 2018.

Platinum edged up 0.1 percent to $790.49, making little impact on a decline of about 14 percent for the year.

Reporting by Swati Verma and Nallur Sethuraman in Bengaluru; Editing by Dan Grebler