* Gold set for biggest weekly retreat since early November
* Expectations of March U.S. rate hike rise sharply
* GRAPHIC-2017 asset returns: http://tmsnrt.rs/2jvdmXl (Updates prices; adds comment, second byline, NEW YORK dateline)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, March 3 (Reuters) - Gold fell 1 percent on Friday and was on track for its biggest weekly loss in 2017 as speculation grew that the U.S. Federal Reserve would press ahead with a rate increase this month.
Fed Chair Janet Yellen said on Friday that the central bank is set to raise its benchmark interest rate later this month as long as economic data on jobs and inflation holds up. to Yellen's comments, the probability of a Fed move in March had already risen to nearly 80 percent, money markets indicated, after hawkish comments from New York Fed chief William Dudley and San Francisco Fed President John Williams. MKTS/GLOB
"If there has been a conscious effort (to raise expectations for a rate hike) I'm about to join it," Fed Vice Chairman Stanley Fischer told an economists' forum, when asked about comments by other Fed officials this past week that have boosted market odds of a March rate hike. gold XAU= was down 0.03 percent at $1,234.41 an ounce by 2:22 p.m. EST (1922 GMT), after falling 1 percent to $1,222.51, the lowest since Feb. 15.
U.S. gold futures GCv1 for April delivery settled down 0.5 percent at $1,226.50.
Gold prices have retreated more than 2 percent after failing to decisively break through resistance at their 200-day moving on Monday.
"The market has responded very clearly to the more aggressive stance by FOMC members regarding rate hikes in March," Mitsubishi analyst Jonathan Butler said. "It's fair to say that a rate hike in March is pretty much priced into gold."
Gold is highly sensitive to rising U.S. interest rates as they increase the opportunity cost of holding non-yielding bullion, while boosting the dollar in which it is priced.
The world's largest gold-backed exchange-traded fund, SPDR Gold Shares GLD , reported a second daily inflow on Thursday, of 1.8 tonnes, bringing the weekly rise to 4 tonnes.
The dollar, however, took a breather after two days of gains on Friday. MKTS/GLOB
Other precious metals, however, were firm.
Spot silver XAG= turned up 0.8 percent to $17.89 but was set to close the week lower for the first time in 2017.
"True to form, physical demand has not driven silver prices, but political uncertainty has driven greater investor interest in silver," said Standard Chartered (LON:STAN) in a note.
"The narrowing spread between platinum and palladium calls into question whether the substitution of platinum for palladium will slow or even reverse given some autocatalysts can make the switch on a 1:1 basis."
Palladium XPD= was 0.1 percent higher at $768, while platinum XPT= rose 1 percent to $995.30.
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