NEW YORK, May 18 (Reuters) - Oil prices edged up about 2% to a two-week high in volatile trade on Monday as worries over supply disruption from the Iran war offset a report the U.S. had agreed to waive sanctions on Iranian crude during talks.

Brent futures rose $2.15, or 2.0%, to $111.41 a barrel at 12:30 p.m. EDT (1630 GMT), while U.S. West Texas Intermediate (WTI) crude rose $1.98, or 1.9%, to $107.40.

After rising and falling more than $2 a barrel in volatile trading on Monday, Brent was on track for its highest close since May 4 and WTI was on track for its highest close since April 7.

Gold prices moved higher on Monday amid choppy trading, as investors kept tabs on an easing sell-off in global bonds and sliding oil prices.

By 10:02 ET (14:02 GMT), spot gold had risen by 0.7% to $4,570.60 an ounce, while gold futures had dropped by 0.3% to $4,574.20 an ounce. The price of the yellow metal slumped to its lowest level since March 30 earlier in the session.

The dollar weakened slightly on Monday, but remained near highs notched last week, as a wilting in global bonds appeared to ease.

By 10:11 ET (14:11 GMT), the U.S. dollar index, which tracks the currency against a basket of its peers, had dropped by 0.2% to 99.08.

The euro was last trading up against the greenback by 0.2% at $1.1644, while the British pound had jumped by 0.5% to $1.3390.

Over the weekend, a drone attack caused a fire at a nuclear facility in the United Arab Emirates, while Saudi Arabia said it had intercepted three drones.

The U.S. dollar firmed on Thursday, as traders this week upped their bets for interest rate hikes from the Federal Reserve later this year after inflation and retail sales data. Meanwhile, President Donald Trump’s visit to China grabbed the spotlight, with market participants hoping for breakthroughs on trade, artificial intelligence, and possibly the Iran war. 

The U.S. dollar index, which tracks the greenback against a basket of six major peers, rose 0.3% to 98.82.