On Tuesday evening (Wednesday morning Asia time), the US and China confirmed that the first round of trade negotiations would finally begin this week, following nearly a month of escalating tariff exchanges. The announcement comes after positive remarks from both nations earlier in the week, signaling a willingness to engage in dialogue.

The trade talks will involve US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer meeting with China’s Vice Premier He Lifeng. The discussions are scheduled to take place in Switzerland from May 8 to 12.

Cautious on Over Optimism

While the start of the trade talks has spark optimism to global market and broader economy outlook, it is important to remain cautious on any over optimism at this stage. Whether it will result in any positive outcome in the trade talk remain uncertainty, this is given that both of the nation could remain firm on their stance.

This come with earlier when china stated that they will not back down unless US is taking a step back by removing its tariff on China. Meanwhile, trump also stated on Tuesday that he is not in hurry to make any deal and mention they are engaged in trade negotiations with other dozens of countries.

Hence, in upcoming, market likely to experience some of the volatility where market could be easily driven by any kind of news from trade negotiation.

Gold Reacts to Trade Talk Developments

As a sentiment-sensitive asset, gold tends to respond strongly to major geopolitical developments. After a sharp two-day rally that saw gains of over 5%, gold gave back part of those gains on Wednesday morning following the announcement of upcoming US-China trade talks.

Gold pulled back from the $3,435 level and is now trading around the $3,365–$3,355 zone—an area that previously acted as resistance and may now serve as support. Technically, holding above this zone could support a continuation of the bullish trend.

However, a break below the $3,365–$3,355 range may signal a shift toward consolidation, suggesting gold could enter a prolonged corrective phase. If the outcome of trade talks remains uncertain or sentiment shifts frequently, gold may experience a period of whipsaw movements within a broader range.

On the broader daily chart, we can identify key zones that separate bullish and bearish trends. Gold’s long-term outlook remains bullish unless it breaks down into the bear zone, which would suggest a potential trend bearish reversal or a prolonged period of corrective wave.

Market Remains Choppy Ahead of FOMC

Markets are likely to stay choppy as attention shifts between the ongoing US-China trade talks and the upcoming FOMC meeting. While trade negotiations may continue to drive sentiment, any surprises or deviations from market expectations in the Fed’s policy outlook could still serve as a key catalyst for short-term market moves.