The variable that moved is the interest rate
The Federal Reserve raised rates by 25 basis points on September 16, to a range of 3.75–4.00%, with all twelve voting members in favor. It was the first hike since July 2023. The median projection points to 4.1% at the end of 2026, and 16 of 18 participants expect another hike before the year ends.
About three months earlier, on July 1, J.P. Morgan expected the Fed to hold rates through the end of 2026, with the first hike coming in 2027. The market is now ahead of that schedule: according to CME FedWatch, the probability of a December hike passed 85% on October 9.
Gold: high targets, a lower price
On September 18, Goldman Sachs cut its end-2026 fair value for gold to $4,650 an ounce from $4,900, after it had stood at $5,400 before June, and kept its 2027 target at $5,400. The stated reason is that higher rates raise the cost of holding an asset that pays no yield, and that this is already showing up in fund flows. J.P. Morgan, for its part, published a $6,000 year-end target on June 9, before the hike. On October 12 gold traded near $4,206.
The axis starts at $3,500 to make the gaps visible, so distances are not ratios from zero. The dashed line is the October 12 price.
The gap between the two numbers is not a dispute between schools of thought. It is a difference in timing. A target written before the Fed's decision reads a market whose terms have changed. The support the optimists lean on is central bank buying: Goldman puts it at about 91 tonnes a month, against about 17 before 2022. J.P. Morgan, on the other hand, recorded reported net purchases of only 16 tonnes in the first quarter, alongside sales of 129 tonnes. The two figures measure different periods and use different methods, which is one more reason to be careful when quoting either.
Oil: the risk sits in the strait
Brent crude has moved above $100 as shipping through the Strait of Hormuz remains disrupted. In the Reuters poll published on September 30, the average forecast for 2026 Brent rose to $89.05 from $85.08 in August, within a range of $77.27 to $97.60. According to the accompanying reports, flows through Hormuz are still below their pre-war level of roughly 19–20 million barrels a day, and most analysts do not expect a return to surplus before 2027.
That matters to the Fed because energy is one reason inflation stays high. According to the Investing.com consensus, analysts expect US inflation in September to rise to 3.6% from 3.4% in August, with the release on October 14.
Stocks: the market is watching earnings, not rates
The S&P 500 closed at 7,811.54 on October 9, up about 14.1% for the year and near its record, while the 10-year Treasury yield stood near 5.24%. J.P. Morgan's year-end target of 7,800 has in effect already been reached. It rests on earnings per share estimated at about $350.
In our view, at these levels the market is leaning on earnings alone. If yields keep rising, that is exactly the risk J.P. Morgan lists among its own: a hawkish repricing of rates and stubborn inflation.
What we are watching
- Oct 14
- US consumer price inflation for September (consensus 3.6%).
- Oct 29
- Fed decision. The chance of an October hike was about 18–21% per CME in early October.
- December
- The Fed meeting for which markets put the hike probability above 85%.
- Ongoing
- Flows through the Strait of Hormuz and the Brent price.
