The term 'gradually loses color' can be summarized by the word 'fades', which is a 5-letter word. Fading is a gradual process in which an object or material loses its color over time. This can happen due to exposure to sunlight, air, water, or other environmental factors. Fading can also occur due to chemical reactions, such as oxidation. Fading is a common phenomenon in fabrics, paints, and other materials.