Oil 2% drop as dollar weakens and gold rises on hopes for a U.S.-Iran deal

As hopes for progress in negotiations between the United States and Iran grew, the possibility of reopening the Strait of Hormuz was raised. As a result, international oil prices fell about 2%. Trump said he would not rush.

Major U.S. stock indexes closed higher on news of falling oil prices. Performance varied across individual sectors. Energy-related stocks came under downward pressure.

The dollar was broadly weaker. The dollar's weakness affected commodity prices and risk-asset prices at the same time. The foreign exchange market reacted sensitively to news related to the Strait of Hormuz.

Gold prices rose as oil and the dollar weakened. Investors responded to safe-haven assets and commodities alike. Prices climbed in both the spot gold and gold futures markets.

However, uncertainty remains over the prospects for negotiations. Some reports differed in their assessments of the likelihood that the negotiations would succeed. Markets showed volatility in response to related announcements.

Early this week, oil prices moved sharply in response to news related to the negotiations. Oil price volatility reflected the outlook for energy supply and demand, as well as conditions for passage through the strait. Traders watched for related announcements.

Overall, issues surrounding the Strait of Hormuz and news of US-Iran negotiations shook major markets—including oil, the dollar, gold and stocks—at the same time. Whether further progress is made in the negotiations remains an important factor for the direction of markets.