(Adds comment, updates prices)
    * Silver on track for worst week since late January
    * Palladium down more than 10% this week

    By Brijesh Patel
    March 18 (Reuters) - Gold was on track for its biggest
weekly drop in nearly four months on Friday, after demand for
the safe-haven metal was hit by hopes of progress in peace talks
between Russia and Ukraine as well as the fallout from a U.S.
interest rate hike.
    Spot gold        was down 0.7% to $1,929.56 per ounce, as of
2:01 p.m. EDT (1801 GMT), weighed down by a stronger dollar.
    U.S. gold futures        settled down 0.7% to $1,929.30.
    The dollar        jumped against its rivals, making bullion
more expensive for overseas buyers.         
    "We have seen the invasion-driven momentum and speculative
fury (for gold) massively cool off over the past 10 days," said
David Jones, chief market strategist at Capital.com.
    Bullion is down 2.8% this week as optimism over the peace
talks lifted sentiment in wider financial markets, denting
demand for safe-haven assets.            
    "If there is a ceasefire or some sort of a deal, gold could
drop fairly quickly," said Edward Meir, analyst with ED&F Man
Capital Markets.
    Earlier this week, the Federal Reserve raised its benchmark
overnight interest rate by a quarter of a percentage point and
forecast an aggressive plan to push borrowing costs to
restrictive levels next year.              
    Higher interest rates tend to raise the opportunity cost of
holding non-interest paying gold.
    However, Standard Chartered analyst Suki Cooper said in a
note that the hawkish U.S. central bank did not derail the
positive sentiment towards gold and that current geopolitical
risk had raised inflation concerns, reigniting longer-term
interest in bullion.
    "While the physical market has come under pressure, growth
in investor interest has more than offset this weakness for now,
suggesting that volatile price action is here to stay," Cooper
added.                   
    Spot palladium        eased 0.3% to $2,503.99 per ounce and
was set for a weekly fall of more than 10% as fears about supply
from top producer Russia eased.             
    Silver        slipped 1.6% to $24.94, while platinum       
rose 0.7% to $1,027.49.

 (Reporting by Brijesh Patel in Bengaluru; Editing by Amy Caren
Daniel and Paul Simao)