#夏日创作营 Goldman trading head: Difficulty of trading in US stocks remains extremely high; consider building positions in gold on dips

Although the S&P 500 index has seen limited overall gains and losses this week, the market’s sharp internal divergence and factor volatility are testing every investor’s judgment.
Tony Pasquariello, head of Goldman’s hedge fund business, said in the latest market macro report that the current market’s “trading difficulty remains extremely high” because momentum volatility is still very high. He recommends closely watching a historical comparison: the typical pattern of S&P 500 volatility ahead of midterm elections.
Pasquariello said that since July, factor volatility has surged sharply, and deleveraging has become obvious. The core of investors’ strategy response should be “simplify the portfolio and concentrate risk in positions with the highest level of conviction.” At the same time, his view on gold has shifted markedly: he believes that a large amount of speculative long positions were washed out in 2026. Coupled with the restart of central bank gold purchases and multiple instances where prices found support around $4,000, this is an appropriate time to establish structural long positions.
In terms of market impact, Pasquariello’s view covers multiple variables that are heating up, including rising expectations for Fed rate hikes, worries that AI capital expenditure growth continues while revenue growth may lag, and geopolitical developments led by Iran that have driven Brent crude oil to jump 33% within the month. These factors together form potential catalysts for increased S&P 500 volatility in the coming weeks.

Under the calm of the index, internal divergence in the market intensifies
This week’s S&P 500 point-to-point movement is limited, but this surface picture masks intense turbulence within the market. Pasquariello noted there is “a significant divergence” between individual stocks and the index— the price spread between implied volatility of a single stock and implied volatility of the index continues to widen, specifically reflected in comparison data for 1-month expiry, 25-delta call options. He believes this phenomenon reflects three market themes: ongoing strong demand for single-stock options versus index options; investors of all types—both institutions and retail—are highly active in the options market; and the opportunity window for dispersion trading is unusually rich. Pasquariello expects this spread will remain at high levels in the near term. Realized volatility of momentum factors has also surged sharply, and this is not limited to the US market—volatility in Japan’s momentum factor has jumped in sync, reflecting broad global penetration of AI-related exposure.

Gold: The time to build on dips has arrived
Pasquariello’s view on gold is the clearest investment recommendation in this week’s report.
He provides four key arguments:
First, since 2026, many speculative long positions have been cleared out;
Second, central bank gold-buying has restarted;
Third, gold price charts show support forming multiple times around $4,000;
Fourth, although rising US interest rates and a strengthening US dollar are short-term headwinds, they are precisely what create opportunities to build structural longs on dips— and he is firmly confident in the long-term logic for this direction. The core basis is the ongoing upward trend in the global governments’ debt burden.
Goldman believes risks to the mid-term gold price forecast are skewed to the upside. Gold’s allocation in private portfolios remains relatively low. Meanwhile, recent geopolitical events—including the Iran situation and broader heightened tensions—may accelerate private investors’ demand for diversified allocations and suppress market expectations for Western fiscal sustainability.

AI capital expenditures: Frenzy continues; the link to revenue growth remains the open question
The scale and pace of AI infrastructure investment continue to dominate the market narrative. Pasquariello said that AI-related credit supply has reached $489 billion since the beginning of this year, with no signs of slowing. He said, “Don’t underestimate the willingness of the biggest spender to keep ramping up.” However, this week’s Google earnings report revealed the market’s most central contradiction: companies’ operating profit reached $41 billion, up 30% year over year; cloud revenue grew 82% year over year; and nearly 90% of the Fortune 100 are using Gemini Enterprise—yet the huge AI capital expenditures have not been clearly tied to revenue growth, leaving the market’s most critical question unanswered. Pasquariello emphasized that next week’s earnings reports—Microsoft (Wednesday), Meta (Wednesday), and Amazon (Thursday)—will be the next key test point. The market needs to see a clear connection between AI investment and revenue growth. Notably, companies related to AI infrastructure are expected to contribute more than half of the S&P 500’s total earnings growth this quarter overall, even though the S&P 500 median stocks’ expected earnings growth rate is also around 10%.

The Fed and Iran: Two external variables heating up
Uncertainty around the Fed policy path has clearly risen this week. Pasquariello said that at the start of the week, market expectations for a July hike were still somewhat surprising, but by the weekend, the interest-rate swap market had clearly tilted toward rate hikes— partly because the market is trying to figure out the new chair’s policy reaction function.
He said he has a “mixed” view on the impact of rate hikes on the stock market. On the negative side, there are risks in tightening monetary policy during a highly dense capital expenditure cycle; historically, Fed tightening has often been one of the conditions for market tops in high-valuation, highly concentrated markets. On the positive side, if rate hikes can anchor inflation expectations and suppress long-end yields, it may not necessarily be bad for risk assets. In terms of Iran, Brent crude oil front-month futures have accumulated a 33% rise this month over the previous month. Pasquariello said that the market’s core concern this week is not only an escalation of military conflict itself, but also the expansion of the conflict’s scope—intervention involving the Houthis and the Red Sea situation makes the situation more complex. He judged that neither side will achieve expected goals, and the situation will remain in a state of “manageable escalation” until one side gives in.

Capital flows and volatility: The key coordinates for the next phase
From the perspective of capital flows, Pasquariello believes the overall tone over the next month will be positive. In the past five weeks, three large financing transactions totaling $163 billion have already been digested, and the scale of new capital raising in August is expected to be significantly lower than earlier. At the same time, as the earnings season approaches its end, stock buybacks are expected to accelerate markedly—August has historically been the month with the highest share of annual buyback spending.
For forward-looking volatility, Pasquariello specifically highlighted a historical comparison: the typical pattern of the S&P 500’s realized volatility ahead of midterm elections often shows regular features of volatility tightening around October. He said, “It’s reasonable to imagine that the market will tighten around then as well,” though cases in extreme years like 1987 or 2008 remind investors that the election cycle is not the only driver of volatility. In addition, Apple’s stock price has recently surged sharply as it alternates for the top position in US market value with Nvidia. But its realized correlation with the Nasdaq 100 index has fallen to at least the lowest level in 20 years—this abnormal signal is also worth attention from market participants. $XAUUSD ‌