* Dollar climbs 0.5 pct against the euro, stocks rise
* Gold extends losses after worst quarter since Q2 2013
* Prospect of further rate hikes weighs on prices (Updates throughout, adds LONDON dateline)
By Jan Harvey
LONDON, Jan 3 (Reuters) - Gold fell on Tuesday as the dollar's buoyant start to the new year kept up the pressure on prices after the metal posted its biggest quarterly loss in more than three years.
The themes of late 2016 appeared to be persisting in the wider markets in the new year, with stock markets bouncing, while the dollar posted its biggest rise in two weeks. MKTS/GLOB FRX/
Spot gold XAU= was down 0.3 percent at $1,148.30 an ounce at 1030 GMT, while U.S. gold futures GCv1 for February delivery were down $2.80 an ounce at $1,148.90.
Gold fell sharply in the wake of Donald Trump's victory in the U.S. presidential election in November, sliding more than 12 percent in the fourth quarter.
Trump's victory boosted the dollar and sparked a sharp rally in bond yields, lifting the opportunity cost of holding non-yielding gold and blunting investors' appetite for the metal.
"The market has carried the theme of higher dollar, yield and stocks into 2017 -- a formidable challenge to gold," Saxo Bank's head of research Ole Hansen said. There were however some potential positives for gold, he added.
"We have plenty of event risks is month, with Donald Trump (taking office) on January 20 being the biggest," he said. "With exposure cut dramatically, we may see the selling pressure from long liquidation fade, as most of the those adjustments would have been carried out before year-end."
Hedge funds and money managers slashed their net long positions in COMEX gold to a near 11-month low and trimmed bullish bets in silver contracts in the week to Dec. 27. strong start to 2016 meant gold still managed to end last year with its first annual gain since 2012, of 8.5 percent.
Indications from the Federal Reserve that it would press ahead with further interest rate hikes this year after only their second rise in a decade last month are buoying the U.S. currency, and therefore pressuring gold.
"Further to the Fed's interest rate hike in December, along with a bullish view of the U.S. economy and the prospects for three more interest rate hikes in 2017, gold will remain weak," Sun Global Investments said in a note on Tuesday.
Silver XAG= was down 0.2 percent at $15.91 at ounce, while platinum XPT= was 0.5 percent higher at $903.75 and palladium XPD= was up 0.8 percent at $684.15.
Palladium was the best performing precious metal last year, rising 20 percent, its biggest annual gain in six years. Platinum lagged gains in the wider complex, however, ending 2016 up just 1 percent.