PRECIOUS-Gold hits two-month low as US-Iran tension stokes inflation and rate hike fears

* U.S. launches strikes on Iran military site

* Dollar rises to one-week high

* U.S. PCE data due at 1230 GMT

* Silver, platinum hit near one-month lows (Updates prices as of 0740 GMT)

By Pablo Sinha

May 28 (Reuters) - Gold prices fell to a two-month low on Thursday as fresh U.S. attacks on Iran boosted the dollar and pushed oil prices higher, stoking concerns about rising inflation and clouding the interest rate outlook.

Spot gold was down 1.5% at $4,388.76 per ounce, as of 0740 GMT, earlier falling to its lowest level since March 26. U.S. gold futures for June delivery fell 1.4% to $4,386.

The dollar rose to a one-week high, making greenback-priced bullion more expensive for holders of other currencies.

"Geopolitical tensions remain high, and we've had too many false alarms from the peace deal talks. So I think the U.S. dollar is going to remain bid, and that means gold is likely to remain under pressure," said Matt Simpson, a senior analyst at StoneX.

The U.S. military carried out new strikes in Iran targeting a military site that officials believed posed a threat to U.S. forces and commercial shipping in the Strait of Hormuz, a U.S. official said, hours after President Donald Trump dismissed an Iranian report of a deal to restore traffic through the strategic waterway.

Oil prices jumped more than 3% on Thursday after Iran's Revolutionary Guards said they targeted a U.S. airbase in response to the U.S. attack.

Elevated crude prices can accelerate inflation and keep interest rates higher for longer. While gold is seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal.

Federal Reserve Governor Lisa Cook on Wednesday said she feels the U.S. central bank should hold short-term interest rates steady for now, but, with tariffs, the Iran war, and a surge in AI-related investment pushing prices higher, she is prepared to hike rates if needed.

Focus is also on the U.S. Personal Consumption Expenditures data, due later in the day, for cues on the Fed's monetary policy path.

Spot silver fell 1.7% to $73.36 per ounce and platinum lost 1.1% to $1,897.80. Both metals earlier hit a near one-month low. Palladium slid 1.2% to $1,373.58.

(Reporting by Pablo Sinha in Bengaluru; Editing by Rashmi Aich and Eileen Soreng)