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Crude prices fell after bolting higher the previous week while gold failed again at the $1,800 test, setting both up for pivotal moves next week as oil producers’ cartel OPEC+ and the Federal Reserve gather for their monthly meetings.

Idiosyncrasy may also be the order for all markets next week as the White House begins releasing details of President Joe Biden’s purported tax hike on the wealthiest of Americans.

Biden reportedly wants to raise the federal capital gains tax to 43.4% for the richest of individuals, bringing combined state and federal rates in places such as New York and California to well above 50% — the highest ever in U.S. history. The president is targeting 0.3% of the American population to fund about $1 trillion in childcare, universal pre-kindergarten education and paid leave for workers. But he will need to overcome a major political hurdle in Congress to do so, Bloomberg reports.

While we await the administration’s word on this, let’s focus on what’s likely to happen in the energy and precious metals space, starting with Wednesday’s OPEC+ meeting.

If we were to believe the producers’ cartel, nothing material will come out of the April 28 meeting, which is to ratify pre-agreed production quotas for May through July.

The 23-member OPEC+ — which comprises the original 13 members of OPEC (i.e. the Saudi-led Organization of the Petroleum Exporting Countries) and 10 other oil producing nations steered by Russia — decided on April 1 to increase output by 350,000 bpd in May and June and by more than 400,000 bpd in July.

Additionally, Saudi Arabia will also ease its unilateral cut of 1 million bpd over the same period, beginning with increases of 250,000 bpd in May and June.

Russian Deputy Prime Minister Alexander Novak, commenting ahead of the meeting, said the idea was “to review the market situation once again” before the start of May-July quotas.

Said Novak: “We made our plans a month ago, so if nothing out of the ordinary happens in the meantime, next week’s meeting will confirm those plans or tweak them.”

The trouble is, quite a lot has happened — in India and Japan, especially, in terms of Covid.

In Vienna too, Iran has been making rapid progress with the United States on talks for a nuclear deal that would free it from Trump-era sanctions to once again export its oil.

On the Covid front, India’s deaths are being overlooked or downplayed, understating the human toll of the outbreak, which accounts for nearly half of all new global cases of the pandemic. With hospitals unbearably full, oxygen supplies running low and people in line dying before they can see doctors, India’s second coronavirus wave is shaping into a crisis beyond help. To visualize what’s happening, think “Italy” in 2020 and add another 1.4 billion people to the mix.

In Japan, the government has declared a targeted state of emergency for Tokyo, Osaka and two other prefectures in an attempt to halt a surge in coronavirus cases, just three months before the Tokyo Olympics.

Iran has, meanwhile, made headway in Vienna talks with world powers though more work is needed, a senior European Union official said. With meetings to resume in the Austrian capital next week, Iranian Deputy Foreign Minister Abbas Araqchi also “assessed the current trend of the talks as going forward, despite the existing difficulties and challenges,” state media reported.

To underscore the importance of these developments, oil prices fell as much as 3% between Tuesday and Wednesday on worries about the Covid situation in India and Japan, and on talk that Iran could win a nuclear deal by May that would allow it to put some two million additional barrels a day on the market.

Futures of both U.S. crude and U.K.’s Brent oil rose in the last two days of the week, but not enough to offset their dismal start.

“Gains in oil are likely to remain capped until India and Japan, as the third and fourth-largest oil consumers, turn a corner in their battle against the virus,” said Sophie Griffiths, head of UK and EMEA research for online broker OANDA.

Novak, speaking ahead of the OPEC+ meeting, described the oil market as “balanced,” saying that if a supply deficit occurred, the cartel could always pump more.

Given the circumstances, it would appear more like a surplus might be in order in the coming months, and the cartel would be pumping less.

For context, oil prices fell to a historic negative pricing of minus $40 per barrel in April 2020 at the height of the Covid-led demand destruction. Production cuts by OPEC+ since then helped the market stage a remarkable recovery, with the rebound accelerating after vaccine breakthroughs in November.

On the gold front, the yellow metal ended the week uneventfully despite coming precariously close to the $1,800 level that would have been key for it to recapture last year’s highs.

It was a crushing disappointment for longs who had been counting on a more meaningful advance in gold after a nine-week high of $1,796.15 on Friday. The last time Comex gold traded above $1,800 was on Feb. 25.

With the weight of the Fed meeting hanging over markets, analysts said gold prices were likely to drift until the central bank’s monthly event was out of the day.

“Dampening demand for safe-havens has capped the rally in gold,” said Ed Moya, analyst at New York’s OANDA. “Gold prices will likely consolidate leading up to the Fed between $1,760 and $1,800.”

Fed Chair Jay Powell, in an interview with Reuters on Tuesday, said the central bank will limit any overshoot of its inflation target.

The U.S. economy is going to temporarily see “a little higher” inflation this year as the recovery strengthens and supply constraints push up prices in some sectors, but the Fed is committed to keeping inflation anchored at 2% over the longer term, Powell said.

Powell also sought to allay the concerns that the Fed’s bond purchases would unleash an unprecedented amount of deficit spending and borrowing by Congress.

Congress has approved an unprecedented $6 trillion in aid between the Trump and Biden administrations to help Americans weather the COVID-19.

The central bank’s bond-buying, Powell said, was aimed at keeping financial conditions easy and markets functioning, and is “unrelated to the magnitude of fiscal deficits,” adding that the Fed doesn’t buy bonds directly from the government.

Policymakers are thus expected to stick with super-easy monetary policy at their meeting next week, even as the economy strengthens and increasing vaccinations make a return to a more normal life in the United States likely in 2021.

Gold Price Roundup

Benchmark gold futures on New York’s Comex did a final trade of $1,776.75 before the weekend. Comex gold settled Friday’s session down $4.20, or 0.2%, at $1,777.80 an ounce. For the week, it dipped 0.1%.

The spot price of gold settled at $1,777.11, down $6.88, or 0.4%. For the week, spot gold rose 0.1%. Moves in spot gold are integral to fund managers, who sometimes rely more on it than futures for direction.

Oil Price Roundup

New York-traded West Texas Intermediate, the benchmark for U.S. crude, did a final trade of $62.05 before the weekend. It settled Friday’s trade at $62.14 a barrel, up 71 cents, or 1.2%, on the day. It fell 1.6% for the week.

London-traded Brent, the global benchmark for crude, did a final trade of $65.99 prior to the weekend. It settled Friday’s trade at $66.11, up 71 cents, or 1.1%. For the week, it fell 1%.

Energy Markets Calendar Ahead

Monday, April 26

Private Cushing stockpile estimates

Tuesday, April 27

American Petroleum Institute weekly report on oil stockpiles.

Wednesday, April 28

EIA weekly report on crude stockpiles

EIA weekly report on gasoline stockpiles

EIA weekly report on distillates inventories

OPEC Meeting and news conference

Thursday, April 29

EIA weekly report on natural gas storage

Friday, April 30

Baker Hughes weekly survey on U.S. oil rigs

Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. For neutrality, he sometimes presents contrarian views and market variables. He does not hold a position in the commodities and securities he writes about.

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