Oil prices fell nearly 4% on Monday. Gold prices and the dollar index, on the other hand, recorded gains.
This move came after US Vice President JD Vance announced progress in talks with Iran and that the Strait of Hormuz is open.
Vance's Iran statement
According to Reuters, Vance said that the talks with Iranian officials in Switzerland formed a "solid foundation" for a final peace agreement despite the tension in the Strait of Hormuz and Lebanon.
According to intermediaries, US and Iranian officials made "encouraging progress" during the first round of negotiations held in Switzerland, which ended in the early hours of Monday.
Sharp drop in oil
The price of a barrel of Brent crude fell $3.18 (3.95%) to $77.39. At the start of trading, prices had risen as high as $82.30 due to US President Donald Trump's threat to resume war against Iran and Tehran's announcement to close the Strait of Hormuz again.
US West Texas Intermediate (WTI) crude oil futures fell $2.15 to $74.45 per barrel. The most-traded August futures contract lost 3.28% to fall to $73.36.
The negotiations began on Sunday under the memorandum of understanding reached last week. The memorandum stipulates an extension of the fragile ceasefire that has been in place since April for at least another 60 days.
Gold rises 1%
Gold prices rose about 1% on Monday. Gold, which had fallen to its lowest level in over a week in the previous session, recovered as progress in US-Iran negotiations eased pressure on oil prices and reduced inflation concerns.
Spot gold rose 0.9% to $4,199.07 per ounce.
Saxo Bank analyst Ole Hansen said, "Energy prices will remain the main driver for the precious metals sector in the short term."
Hansen stated, "We see that the ongoing negotiations between the US and Iran in Switzerland continue to point to a deal that will add new barrels of crude oil to the market."
Dollar index rises
The dollar index, supported by investor optimism about the possibility of a deal after the first round of US-Iran talks, rose 0.06% to 100.90 points.
The euro fell 0.24% against the dollar to $1.1444.
After UK Prime Minister Keir Starmer announced he planned to resign, the sterling recovered from its intraday low to rise to $1.318. According to the Financial Times, the sterling reached $1.32 and 1.15 euros.
