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Gold Rises as the USD Weakens While U.S. and Iran Talk to End Their War

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Gold traded higher early Monday as the U.S. dollar fell on hopes the United States and Iran are nearing a deal to end the three-month war that has caused the largest-ever energy supply shock.

Gold for July delivery was last seen up $45.80 to US$4,602.20 per ounce

The rise comes as the countries continue talks to end the war that has kept the Strait closed for nearly three months, blocking much of the 20% of daily oil demand supplied by Persian Gulf nations. The Wall Street Journal reported Iran is willing to lift its blockade of the Strait in exchange for the United States ending its blockade of Iranian ports, though Iran warned a final deal is not imminent.

The price of the precious metal has remained rangebound as investors turn to the dollar on fears central banks will hike interest rates to combat the rising inflation that has followed the war's closure of the Strait of Hormuz, shutting in most of the oil exports from Persian Gulf nations that supplied a fifth of daily oil demand.

The dollar fell early, with the ICE dollar index last seen down 0.27 points to 98.97. Treasury markets were closed due to the U.S. Memorial Day holiday.

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Oil Prices Slump as the United States and Iran Continue Peace Talks

Oil traded sharply lower early Monday, falling 6% as peace negotiations between Iran and the Untied States continue, raising hopes for a deal that will reopen the blockaded Strait of Hormuz.West Texas Intermediate crude oil for July delivery was last seen down $5.77 to US$90.83 per barrel, the lowest since April 20, while July Brent oil was down $6.20 to US$97.34.The drop comes as the countries continue talks to end the war that has kept the Strait closed for nearly three months, blocking much of the 20% of daily oil demand supplied by Persian Gulf nations. The Wall Street Journal reported Iran is willing to lift its blockade of the Strait in exchange for the United States ending its blockade of Iranian ports, though Iran warned a final deal is not imminent.The closure of the Strait has boosted oil prices to four-year highs, raising inflation and pressuring U.S. President Trump to come up with a deal to end the war as the high-demand U.S. driving season begins with today's Memorial Day holiday, further squeezing supply."Both Trump and Iran have strong reasons to find a quick way out of the war and crisis, for economic, financial, political and military reasons," SEB Research noted.

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Crude Oil Prices Fall as Market Hopes for Peace Deal Between U.S., Iran

Crude oil prices dropped on Monday to two-week lows as the market expects the U.S. and Iran are nearing an agreement to end the war.Brent crude at last look lost 4.8% to US$98.53/barrel and West Texas Intermediate crude fell 5% to $91.78/barrel. U.S. President Donald Trump over the weekend said the two parties had "largely negotiated" an understanding on a peace deal that would reopen the Strait of Hormuz, Reuters said in a Monday report.However, both sides played down hopes that a deal will be reached soon, the report said. Additionally, any normalization in oil flows through the strait will take months, according to analysts."We've been at this stage before, only for talks to break down. Therefore, the market will likely be more cautious about overreacting," Reuters quoted Warren Patterson, head of commodities strategy at ING, as saying."We continue to believe that the key factors for the oil market to watch should be the physical oil flows and so far, flows through the Strait remain restricted," UBS analyst Giovanni Staunovo was quoted as saying.

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Sector Update: Energy Stocks Rise Late Afternoon

Energy stocks advanced late Friday afternoon, with the NYSE Energy Sector Index increasing 0.3% and the State Street Energy Select Sector SPDR ETF (XLE) adding 0.6%.The Philadelphia Oil Service Sector Index was shedding 0.2%, and the Dow Jones US Utilities Index was up 0.8%.Front-month West Texas Intermediate crude oil rose 0.4% to $96.77 a barrel, and the global benchmark Brent crude contract rose 1.3% to $103.93 a barrel. Henry Hub natural gas futures fell 3.6% to $2.91 per 1 million BTU.In sector news, Intercontinental Exchange (ICE) and OKX said Friday that they are collaborating to launch perpetual futures contracts tied to oil benchmarks. The new perpetual futures contracts will be underpinned by Intercontinental Exchange's Brent Crude and WTI Crude energy benchmarks, the companies said.In corporate news, American Resources' (AREC) minority holding ReElement Technologies formed a joint venture with Posco International to build rare earth and permanent magnet production facilities in the US, the company said Friday. American Resources shares were down 0.2%.Matador Resources (MTDR) shares added 1.2% after the company said Thursday it acquired 5,154 net undeveloped acres in the Delaware Basin for about $1.14 billion in a recent Bureau of Land Management oil and gas lease sale.TotalEnergies (TTE) is considering selling a 50% stake in a portfolio of European renewable energy assets, Bloomberg reported. TotalEnergies shares were down 0.7%.Frontline (FRO) shares fell 3.5% after the company reported Q1 adjusted earnings below analyst expectations.

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