PRECIOUS-Gold extends decline on expectations of high interest rates

* Iran launches missiles into Israel

* Spot gold down 22% from record peak hit in January

* Palladium down nearly 3% (Updates for US morning hours)

By Ashitha Shivaprasad

March 24 (Reuters) - Gold prices extended their decline on Tuesday, weighed down by persistent Middle East tensions that fanned worries of inflation and expectations of higher interest rates globally.

Spot gold fell 0.6% to $4,377.93 per ounce by 9:00 a.m. ET (1300 GMT), after hitting its lowest since November at $4,097.99 in the previous session.

U.S. gold futures for April delivery lost 0.6% to $4,378.80.

"If the war continues and energy prices keep grinding higher, it's not great news for gold," said Bart Melek, global head of commodity strategy at TD Securities.

"Gold is going to be under pressure for the second quarter, but I think by year-end, the gold outlook should again look pretty sweet, as we are hoping that by then central banks like the Fed will have more freedom and we could see the dollar ease and rates drop," he added.

Bullion is considered a safe-haven asset and an inflation hedge, but because it yields no interest, it loses appeal in a high-rate environment.

Iran launched waves of missiles at Israel on Tuesday, a day after U.S. President Donald Trump said there had been "very good and productive" talks aiming at halting the war unleashed by the U.S. and Israel now raging across the Middle East.

The war has effectively halted shipments of about one-fifth of the world's oil and liquefied natural gas through the Strait of Hormuz, pushing up energy prices and stoking inflation concerns. Following this, top central banks have emphasised their readiness to act if the war drives a broader surge in prices.

Spot gold has fallen about 22% from its record peak of $5,594.82 reached on January 29.

"The recent price slump is likely to be just as much of an overreaction as the massive rise at the start of the year. In a sense, the pendulum has swung from one extreme to the other for gold," analysts at Commerzbank said in a note.

Among other metals, spot silver fell 1.3% to $68.20, platinum added 0.2% to $1,885.18 and palladium lost 2.9% to $1,392.25. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Sahal Muhammed)