MARKETS-PRECIOUS (UPDATE 5) * Palladium hits nine-year high of $787.25/oz * Spot silver at three-week highs * Coming up: U.S. weekly mortgage index; 1200 GMT (Adds comment, refreshes prices) By Amanda Cooper LONDON, Dec 29 (Reuters) - Gold notched up a second straight day of increases to near two-week highs on Wednesday, closing in on a tenth consecutive yearly gain as doubt reemerged over the U.S. economic outlook and weakened the dollar. Palladium hit fresh nine-year highs, driven by expectations for robust demand next year, while silver hovered near three-week highs. The latest U.S. data, which showed consumer confidence unexpectedly worsening in December and a drop in prices of single-family homes in October, was at odds with other signs suggesting recovery was accelerating in the world's largest economy. [ID:nN28251373] Spot gold edged up 0.1 percent to $1,406.15 an ounce by 1448 GMT, after hitting a two-week high of $1,406.75 on Tuesday. U.S. gold futures for February delivery were virtually unchanged on the day at $1,404.20. "Is gold a bubble? Perhaps, but the trend is still clearly 'from the lower left to the upper right' on the charts and in all currency varieties," said Dennis Gartman, author of the Gartman investment newsletter. "Only the courageous or the ill-advised shall choose to 'fade' this trend and we are neither. Certainly we are not the former," he said, adding the group had added to its long position in dollar-priced gold on Tuesday. Gold is on track for a near 30-percent gain this year, fuelled by investors seeking an alternative to increasingly volatile currencies, stocks and bonds, against a backdrop of an uncertain U.S. economic outlook and Europe's debt crisis. U.S. Treasury prices struggled to remain in positive territory as anxiety grew over the coming $29 billion sale of seven-year notes. [US/]

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