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UPDATE 2-Turkish gold trader implicates Erdogan in Iran money laundering

(Adds testimony regarding Erdogan)

Nov 30 (Reuters) - A Turkish-Iranian gold trader on Thursday told jurors in a federal court in New York that Turkish President Recep Tayyip Erdogan personally authorized a transaction on behalf of Iran.

Reza Zarrab is cooperating with U.S. prosecutors in the criminal trial of a Turkish bank executive accused of conspiring to evade U.S. sanctions against Iran. At the time of the alleged conspiracy, Erdogan was Turkey's prime minister.

The testimony came on the third day of the trial of Mehmet Hakan Atilla, an executive at Turkey's state-owned Halkbank , who has pleaded not guilty in Manhattan federal court.

U.S. prosecutors have charged nine people in the case, although only Zarrab, 34, and Atilla, 47, have been arrested by U.S. authorities. Prosecutors have said the defendants took part in a scheme from 2010 to 2015 that involved gold trades and fake purchases of food to give Iran access to international markets, violating U.S. sanctions.

The case has fueled tensions between the United States and Turkey, which are NATO allies. Erdogan's government has said the case was fabricated for political reasons.

Zarrab, who began testifying on Wednesday morning, has told jurors that he ran a massive international money laundering scheme to help Iran get around U.S. sanctions and spend its oil and gas revenues abroad. He said he helped Iran use funds deposited at Halkbank to buy gold, which was smuggled to Dubai and sold for cash.

Zarrab has said that Atilla helped develop and carry out the transactions, along with Halkbank's former general manager, Suleyman Aslan.

Zarrab also said that he paid bribes worth more than $50 million to Zafer Caglayan, who was Turkey's economy minister, to further the scheme.

Both Caglayan and Aslan were charged in the case. Turkey's government has previously said that Caglayan acted within Turkish and international law, and Halkbank has said all of its transactions fully complied with national and international regulations. (Reporting By Brendan Pierson in New York; editing by Jonathan Oatis and Dan Grebler)