PRECIOUS-Gold falls 2% as rate-hike bets boost dollar to one-year high

(Updates for U.S morning hours)

* US waives oil sanctions on Iran

* US PCE data due on Thursday awaited for Fed cues

* Silver drops 5%, platinum and palladium down over 2%

By Sukanya Mitra and Anjana Anil

June 23 (Reuters) - Gold prices dropped on Tuesday as the U.S. dollar hit a one-year high on increased expectations of a rate hike from the Federal Reserve, outweighing support from softer oil prices amid progress in U.S.-Iran talks.

Spot gold dipped 1.7% to $4,118.73 per ounce by 09:26 a.m. ET (1326 GMT).

U.S. gold futures for August delivery fell 1.6% to $4,135.60 per ounce.

The U.S. dollar rose to its highest level in more than a year on Tuesday, making gold more expensive for overseas buyers.

"Right now gold and silver aren't really looking to the Middle East. I think they're more looking closely at what the Federal Reserve said last week," said Bob Haberkorn, senior market strategist at StoneX.

Hawkish signals to counter inflation from new Fed Chair Kevin Warsh have pushed investors to scale up bets on interest-rate hikes. Traders now see about an 86% chance of a rate hike by December, up from 61% before the Fed meeting last week, according to the CME FedWatch Tool.

While gold is often seen as a hedge against inflation, the precious metal tends to suffer in a high-interest-rate environment due to its non-yielding characteristics. On the geopolitical front, the United States waived sanctions on Iran for 60 days from Monday, post the first talks under a nascent peace deal, though hostilities in Lebanon continued, officials said. Earlier, U.S. Vice President JD Vance said talks with Iranian officials in Switzerland had laid a good foundation for a final peace deal, with tanker traffic picking up through the previously choked Strait of Hormuz.

Brent crude futures fell more than 1% to $77.07 a barrel.

Investors now await U.S. Personal Consumption Expenditures data, the Fed's preferred inflation gauge, due on Thursday for further cues on monetary policy.

Among other metals, spot silver fell 4.8% to $62.08 per ounce, platinum dropped 1.6% to $1,651.35, and palladium slid 2.2% to $1,237.99. (Reporting by Sukanya Mitra and Anjana Anil in Bengaluru; Editing by Jonathan Ananda)