* Dollar index        hovers near 1-1/2-month high
* Fed should not rush to lower interest rates - Fed's Waller
* Spot gold        falls 1.3% on Tuesday
* Short-term fate of gold likely in hands of bond market -
analyst

By Harshit Verma
       Jan 17 (Reuters) - Gold prices extended losses on
Wednesday as the U.S. dollar strengthened after hawkish comments
from a Federal Reserve official dampened expectations for a
March interest rate cut, while traders awaited comments from
more Fed speakers this week.
    Spot gold        was down 0.2% at $2,023.49 per ounce, as of
0415 GMT, after stooping 1.3% in the previous session - its
biggest single-day decline since Dec. 4, 2023.
    U.S. gold futures         also fell 0.2% to $2,026.90.
    Flow of funds to the U.S. dollar have been a key driver
impacting the gold price, said Michael Langford, chief
investment officer at Scorpion Minerals Ltd, forecasting bullion
to trade around $2,000/Oz in the near term.
        The dollar index        rose 0.1%, making bullion more
expensive for other currency holders. It shot up to a more than
one-month high on Tuesday after Fed Governor Christopher Waller
said that the U.S. central bank should not rush to lower
interest rates until lower inflation can clearly be sustained.
      
    Waller's comments triggered a broad sell-off, pulling all
three major U.S. stock indexes lower, while the benchmark U.S.
Treasury yields logged their biggest daily move upwards in more
than three months on Tuesday.                       
    With geopolitical tensions escalating, safe-haven flows
could provide a floor for the gold price. However, "the
short-term fate of the gold price is likely in the hands of the
bond market," Tim Waterer, chief market analyst at KCM Trade,
wrote in a note. 
    Traders are pricing in an about 65% chance of a rate cut by
the U.S. central bank in March, down from about 75% probability
seen on Tuesday morning, according to the CME FedWatch tool.
        Spot silver        fell 0.4% to $22.81 per ounce.
        Platinum        declined 0.3% to $892.37 and palladium
       slipped 0.2% to $934.44. As the sister metals approach
price parity, the rate at which platinum is displacing palladium
in the manufacture of autocatalysts is slowing, a trend which is
likely to persist through this year.

    

    
 (Reporting by Harshit Verma in Bengaluru; Editing by Rashmi
Aich and Sherry Jacob-Phillips)