Traders are closely watching two important events this week that are likely to set the tone for oil and gold prices next month.

OPEC Meeting And Oil Prices

OPEC+, which is comprised of oil-producing countries, ministers from the Organization of the Petroleum Exporting Countries (OPEC) and their allies, including Russia and Kazakhstan, will be making another important decision about oil supply this week. Oil ministers will be meeting virtually today to discuss the matters about oil supply.

On Monday, technical experts from the oil cartel sent a more optimistic message on the back of the improving global oil demand this year. However, not everything was optimistic in their report. There were clear concerns about the adverse influence of the exploding coronavirus situation in India. Analysts believe that the raging outbreak of coronavirus in India, along with resurgent Covid-19 cases in Japan and Brazil, could dent oil demand as much as 350K barrels per day (bpd).

Oil demand looks incredibly strong elsewhere. For instance, growth is accelerating over in the U.S., and Chinese economic numbers are also consistently improving. As for Europe, coronavirus restrictions are easing in some countries, although others are still hesitant to take any bold actions.

What Is Expected

Market players expect the cartel to restore another 2 million barrels a day over the next three months, which is approximately one-quarter of the output taken offline due to the coronavirus.

Crude And Brent

Both Crude and Brent oil prices have been consolidating for the past few days as traders are hesitant to place any big bets ahead of this landmark event. Crude and Brent oil prices are struggling to stay above their 50-day SMA on the daily time frame. The outcome of the OPEC+ meeting will determine if prices will move higher.

Speaking from a technical analysis perspective, it seems like even if the OPEC+ meeting concludes with a positive outcome, the influence of that on oil prices may be short-lived because we have no real evidence of bull strength.

FOMC Meeting

Jerome Powell, the Fed Chairman, will remain in the spotlight as the Fed’s two-day monetary policy begins today. The outcome of this meeting is likely to bring mammoth moves in the price of gold, which is struggling to keep its bullish momentum.

Traders and investors aren’t expecting any change at this meeting as both the interest rate and asset purchase program are likely to remain unchanged. What will be monitored very closely by traders will be the tone of the Federal Reserve’s Chairman and his view of the U.S. economy.

There is no doubt that U.S. economic data has started to print some strong numbers. For instance, the New Durable Goods Orders confirmed a serious increase in new orders, which affirms that economic growth is accelerating. So, the Fed cannot just turn a blind eye to all these solid economic numbers and keep relaying the same message.

What To Expect From Gold

Any hint of hawkish tone in Jerome Powell’s speech could move the price of gold. We could see the gold price easily dropping towards $1750 or even lower. On the flip side, if the speech turns out to be nothing more than jawboning, we could see the gold price finally breaking $1,800 .