(Adds analyst's comments and updates prices)
* Palladium set for biggest monthly gain since Feb. 2008
* Dollar set for monthly rise
* Palladium likely to stay volatile - analyst
Jan 31 (Reuters) - Gold prices steadied on Monday but remained poised for their worst monthly showing since September as the U.S. Federal Reserve's plans for interest rate hikes boosted the dollar, driving away bullion investors.
Spot gold was flat at $1,790.87 per ounce by 1219 GMT, and has lost about 2.1% so far this month. U.S. gold futures rose 0.3% to $1,791.70.
"The Fed's hawkishness is largely unmatched by other major central banks, strongly supporting the dollar, which represents quite a headwind for gold," ActivTrades senior analyst Ricardo Evangelista said.
The dollar index is en route to a monthly gain, making greenback-priced bullion more expensive for holders of other currencies.
The Fed plans to raise interest rates in March on the assumption the economy will largely steer clear of fallout from the Omicron coronavirus variant and keep growing at a healthy clip.
Although gold is considered a hedge against inflation, interest rate hikes would raise the opportunity cost of holding non-yielding bullion.
January provided quite a good example of what's driving gold, Julius Baer analyst Carsten Menke said, adding that initially there was a positive performance on rising inflation fears and then the Fed and its view of a strong economy reversed this, and brought prices back below $1,800.
Spot palladium was steady at $2,377.88, with the auto-catalyst metal set for a monthly gain of nearly 26%, its best since February 2008.
"Concerns about supply outages in Russia in the event of an escalation of the Ukraine crisis have supported palladium in recent weeks," UBS analyst Giovanni Staunovo said, adding "palladium is likely to stay volatile over the coming weeks."
"So far there has been no disruption to production and exports. Short-covering activity likely also helped, considering non-commercial accounts were net-short the white metal at the start of this year."
Silver gained 0.2% to $22.46 an ounce, while platinum was little changed at $1,007.67. (Reporting by Bharat Govind Gautam in Bengaluru; Editing by Emelia Sithole-Matarise and Louise Heavens)
