* Gold set for worst week since mid August
* Dollar index holds near multi-month highs
* Silver on course for biggest weekly decline since February
By Karthika Suresh Namboothiri
Nov 9 (Reuters) - Gold fell to its lowest in a month on Friday on a strong dollar, which gained after the U.S. Federal Reserve reaffirmed its monetary tightening stance, seen as a negative for non-yielding bullion.
The Fed held interest rates steady on Thursday but is widely expected to raise interest rates in December - which would be its fourth hike this year - as it pointed to a healthy economy that was marred only by a dip in the growth of business investment. gold XAU= was down 1 percent at $1,211.04 per ounce at 10:31 a.m. EST (1531 GMT), having touched its lowest since Oct. 11 at $1,208.83. It was on track to end the week more than 1.7 percent lower, the steepest weekly decline since the week of Aug. 17.
U.S. gold futures GCcv1 fell over 1 percent to $1,212.20 per ounce.
"The Fed's announcement caused the dollar to strengthen and the outlook for higher U.S. interest rates has gold on the defense," said Bob Haberkorn, senior market strategist at RJO Futures.
Higher interest rates would be bullish for the dollar because investors from other parts of the world would rather convert local currencies to the greenback versus going into gold, he added.
The dollar index .DXY , a gauge of its performance against six major peers, was steady after touching a one-week high at 96.916, not far from a 16-month high of 97.2 it hit on Oct. 31. USD/
Also weighing on overall commodity market sentiment, was a decline in oil prices, with benchmark Brent crude LCOc1 falling to its lowest since early April. O/R
Silver XAG= dropped 1.7 percent to $14.17 per ounce, having touched its lowest since Sept. 18. The metal was headed for its worst week since February.
"Gold leads the way in the metal market, with gold down 1 percent, it would be pretty hard for silver or platinum or palladium to rally," Haberkorn said.
Platinum XPT= fell more than 1.5 percent to $851.05 an ounce, while palladium XPD= fell nearly 1 percent to $1,113.97 per ounce.