To update prices and add details

May 28 (Reuters) - Gold prices fell to a two-month low on Thursday as fresh U.S. attacks on Iran pushed up oil prices, raising concerns about rising inflation and casting a shadow over interest rate expectations.

By 0409 GMT, spot gold had fallen 1.7 percent to $ 4,380.62 an ounce , after earlier hitting its lowest level since March 26. U.S. gold futures for June delivery were down 1.6 percent at $ 4,377.10 .

The dollar rose to its highest level in a week , increasing the cost of dollar-denominated gold for holders of other currencies.

Matt Simpson, senior analyst at StoneX, said, "Geopolitical turmoil is still escalating, and we've had a lot of false alarms about the peace agreement negotiations. So I think the demand for the dollar will continue, and that means gold is likely to remain under pressure."

A U.S. official told Reuters that the U.S. military carried out new airstrikes in Iran targeting a military site that officials concluded posed a threat to U.S. forces and commercial shipping in the Strait of Hormuz, hours after President Donald Trump denied an Iranian report about an agreement to restore traffic through the strategic waterway.

Oil prices rose by more than three percent on Thursday after Iran's Revolutionary Guard announced it had targeted a U.S. air base in retaliation for the U.S. attack.

High oil prices can accelerate inflation and keep interest rates elevated for longer. Gold is often seen as a hedge against inflation, but rising interest rates tend to negatively impact the non-yielding asset.

Federal Reserve Governor Lisa Cook said on Wednesday that she believes the U.S. central bank should keep short-term interest rates unchanged for now, but with tariffs, the Iran war and increased AI-related investments pushing prices up, she is prepared to raise interest rates if necessary.

Investors are awaiting US personal consumption expenditures data, due later today, for clues about the direction of US monetary policy.

As for other precious metals, silver fell 3 percent to $ 72.37 an ounce in spot trading, and platinum lost 1.4 percent to $ 1,890.81 , both hitting their lowest levels in nearly a month.

Palladium fell 1.9 percent to $ 1,364.26 .