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June 23 (Reuters) - Gold prices fell more than 1 percent on Tuesday as the dollar held steady amid expectations that the Federal Reserve will raise interest rates this year.

Gold fell 1.1 percent to $ 4,142.61 an ounce in spot trading by 0414 GMT. U.S. gold futures for August delivery also declined, dropping 1 percent to $ 4,160.20 .

The United States lifted sanctions on Iran for 60 days starting Monday after initial talks under a nascent agreement to end the war, while officials reported that fighting in Lebanon had subsided under the deal aimed at ending hostilities across the region.

U.S. Vice President J.D. Vance said talks with Iranian officials in Switzerland laid a good foundation for a final agreement, despite Iran's denial that it had begun discussions on its nuclear program.

Chicago Federal Reserve President Austan Goolsbee said that with the labor market stabilizing, he is focused on determining whether the extremely high inflation will continue as it is or will decline as the impact of high tariffs fades and if the conflict in the Middle East is resolved.

According to the CME Group's FedWatch tool, traders now see an 88 percent probability of an interest rate hike in December, compared to 61 percent before last week's Federal Reserve meeting.

Investors are awaiting US personal consumption expenditures data, the Federal Reserve's preferred inflation measure, due later this week for further clues about monetary policy.

As for other precious metals, silver fell 3.3 percent to $ 63.05 an ounce in spot trading, platinum dropped 1.9 percent to $ 1,646.30 and palladium declined 1.8 percent to $ 1,242.75 .