US-China Trade Talks Optimism: Stock Gains, Gold Tumbles

On Wednesday morning (Asia time), both US and China officials confirmed that trade negotiations would begin this week. US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet with China’s Vice Premier He Lifeng for the first round of talks, set to take place in Switzerland from May 8 to 12.

The announcement follows positive comments from both sides earlier this week, signaling openness to negotiations after a period of heightened tensions.

Optimism Boosts Equities, Gold Pulls Back

The start of these talks has sparked optimism in US-China trade relations following the intense trade war in early April, which saw tariffs exchange and rattled global markets, raising concerns over economic disruptions. Economic data from both China and the US have shown some worrying signs.

This comes as Treasury Secretary Bessent has repeatedly warned that steep tariffs are unsustainable, expressing hope for further de-escalation. Meanwhile, President Trump also hinted in earlier remarks that tariffs could be reduced to 50%–60%, but definitely not to zero.

Global equities reacted positively, with US stock index futures initially dipping but rising after the announcement of trade talks. Meanwhile, gold, which had gained more than 5% over the past two days, saw a partial pullback on Wednesday morning following the news.

Stay Cautiously Optimistic

While the start of trade talks has brought optimism to global markets and the broader economy, “Whether it will result in a positive outcome remains to be seen, especially as both the US and China may stay firm on their positions,” said Ultima Market Senior Analyst Shawn.

President Trump also stated on Tuesday that he is in no hurry to make any deal, as the US is still engaged in trade negotiations with other countries. Meanwhile, China has made it clear that it will not back down unless the US shows genuine intent to de-escalate tensions by removing tariffs.

Gold Volatility Remains Amid Trade Talk Uncertainty

Gold surged over the past two days but gave back part of its gains following the announcement of US-China trade talks, as markets reacted with renewed optimism. Despite the pullback, gold remains a favored risk-sensitive asset, and ongoing developments in trade negotiations are likely to drive continued volatility.

XAUUSD, 4-H Chart Analysis; Source: Ultima Market MT5

Price action could remain range-bound between $3,435 and $3,270 if trade talk progress continues to shift.

From a technical perspective, the $3,380–$3,350 zone is a key area to watch. A sustained move above this zone could signal renewed bullish momentum, while a break below may keep gold trading within a broader range-bound trend.

Disclaimer

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