Australian shares surged on Monday after the US and Iran reached a preliminary peace deal, sending gold prices higher and energy stocks lower as oil tumbled.

The S&P/ASX 200 index rose 1.5% to 8,928.50 by 00:39 GMT, briefly touching its highest level since April 22, adding to gains of more than 2% from the previous week.

US and Iranian officials confirmed a peace framework providing for an immediate, permanent ceasefire and the reopening of the Strait of Hormuz.

The agreement also includes the lifting of the US naval blockade on Iranian ports.US President Donald Trump declared the deal "complete" in a Truth Social post on Sunday, writing: "I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow!"

Gold prices climbed 2% to above $4,300 an ounce, reaching their highest level since June 9 on the back of the announcement.Spot gold traded at $4,304.11 an ounce, extending gains for a third consecutive session.That rally drove the Australian gold sub-index up 8%, setting it up for its best day in more than two months.Northern Star Resources jumped 5.3% and Evolution Mining soared 9%, while Vault Minerals rocketed 13% after confirming it was on track to meet its 2026 production guidance.

The mining sub-index rose 3.7%, supported by gains from BHP and Rio Tinto, which advanced 3.1% and 1.6% respectively.The broader materials sector climbed 3.9%.

Oil prices tumbled, sending energy stocks lower by 2.5%.Brent crude fell more than 4% toward $83 a barrel, pressured by expectations that the reopened Strait of Hormuz would restore normal energy flows.Commonwealth Bank commodities analyst Vivek Dhar said crude oil flows "should be able to resume quickly and have a good chance of reaching pre-war levels in three to four months."

Woodside Energy fell 1.6% after denying market speculation about a potential takeover. The company issued a statement saying "Woodside is not aware of any proposal and confirms it is not in discussions regarding a potential transaction with Exxon Mobil Corporation."

A formal signing ceremony is scheduled for 19 June in Switzerland, with Pakistani Prime Minister Shehbaz Sharif announcing on X that "both sides have declared the immediate and permanent termination of military operations on all fronts, including in Lebanon."