PRECIOUS-Gold drops on stronger dollar, rising bets on higher interest rates

* Turkey's gold reserves tumble nearly 120 tons in two weeks

* Indian dealers charge first gold premiums in two months

* Silver falls more than 7% (Updates for US morning hours)

By Ashitha Shivaprasad

April 2 (Reuters) - Gold prices fell on Thursday as the U.S. dollar and oil prices rose after President Donald Trump said the U.S. would continue attacks on Iran, spurring inflation concerns and bolstering expectations of higher interest rates.

Spot gold was down 3.6% at $4,587.55 per ounce as of 9:15 a.m. EDT (1315 GMT), after hitting a two-week high earlier in the session. U.S. gold futures fell 4.2% to $4,613.30.

The dollar rose sharply, making greenback-priced bullion less affordable to other currency holders.

"The market is very focused on Trump's comments, which so far offer little sign of a quick resolution to the energy situation," said David Meger, director of metals trading at High Ridge Futures.

This is weighing on gold and silver prices, as there is less likelihood of rate cuts, he added.

Trump said in a televised speech that the U.S. military had nearly accomplished its goals in Iran, but offered no clear timeline for ending the month-long war and vowed to bomb the country back into the "Stone Ages".

Following this, oil prices climbed. Higher energy prices feed through to broader inflation, reducing the scope for central banks to cut rates.

Despite its inflation-hedge status, gold struggles when rates are high as it yields no interest. Spot gold has fallen 13% since the Iran conflict started on February 28.

Sentiment was also hit by news that the Turkish central bank's gold reserves dropped by 69.1 metric tons to 702.5 tons last week, bringing the fall in the last two weeks to more than 118 tons as authorities seek to blunt market fallout from the war.

In Asia, gold traded at a premium in India for the first time in two months as softer prices boosted demand, while premiums in China ticked down slightly as buyers awaited a deeper correction.

In other metals, spot silver dropped 7.1% to $69.78, platinum fell 2.7% to $1,911.13 and palladium shed 1.3% to $1,453.70. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Jan Harvey)