Central Banks Gobble 60 Tonnes of Gold Each Month, but a Red-Hot US PMI Gives the Fed Cover to Stay Hawkish

Gold holds above $4,500 as central bank buying (60t/month) and ETF inflows offset hawkish Fed and strong US data. Spot at $4,521, down 0.5%.

Gold is proving remarkably resilient, clinging to levels north of $4,500 even as a white-hot US economy and a newly combative Federal Reserve turn up the heat on the zero-yielding metal. The tension between powerful structural demand and a hawkish macro backdrop has never been more vivid — and the tug-of-war shows no sign of resolution.

The biggest driver of that demand is also the least visible. Goldman Sachs this week radically overhauled its demand model, revealing that central banks are now buying roughly 60 tonnes of gold per month — more than double the 29 tonnes analysts had previously estimated. This institutional buying spree has been enough to absorb the seasonal softness from China’s jewellery market and keep prices from sliding. In April, physically backed gold ETFs attracted $6.6 billion in global inflows, pushing total holdings to around 4,137 tonnes — the third-highest level on record. Chinese funds racked up their eighth consecutive month of inflows, underscoring a sustained shift away from other assets.

The long-term case got another boost on May 20, when the 20th anniversary edition of the “In Gold We Trust” report was released. Its original price target of $4,800 by 2030 has already been hit this year. The authors have now raised the goal to $8,900 by the end of the decade under an inflationary scenario. That March’s 600-dollar monthly sell-off — the largest absolute decline in gold’s history — did not break the broader uptrend only reinforces the conviction of bulls.

Yet the macro winds have shifted sharply against the metal. Thursday’s US flash PMI for May came in at 55.3, the highest reading in four years. Add initial jobless claims of 209,000 — well below expectations — and the case for the Fed to ease any time soon all but evaporates. The CME FedWatch Tool now assigns a 58% probability to another rate hike by the end of 2026. Ten-year Treasury yields are hovering near 4.6%, widening the opportunity cost of holding bullion.

Geopolitics, meanwhile, is a double-edged sword. Hopes of a US-Iran nuclear deal faded after Iran’s Supreme Leader Khamenei decreed on May 21 that the country’s enriched uranium stockpile must remain on home soil — a non-starter for the Trump administration. That standoff provides a floor for safe-haven demand. But UBS analyst Giovanni Staunovo cautions that elevated oil prices, spurred by the same tensions, are reigniting inflation fears that only strengthen the case for more Fed tightening. In other words, the same crisis that props up gold during the day can choke it at night.

Spot gold was last trading at $4,521.30, down 0.5% on the day, after closing Thursday at $4,504. That leaves it up 3.74% year-to-date, with the relative strength index hovering around 50 — neutral territory. June futures shed $29.20 to $4,513.30. The metal has now fallen roughly 17% from its 52-week high of $5,450 set in January.

Technicians see the next meaningful resistance at $4,878, while the critical support level sits at $4,171. A break below that would threaten the uptrend that has been in place since 2025. Short-term direction may hinge on the upcoming flash PMI revisions and US jobs data: any disappointment in those numbers would revive rate-cut bets and give gold fresh impetus.

Silver, less burdened by the same rate sensitivity, managed to gain more than 1% on the day to around $76.65, while platinum fetched $1,962. Peter Grant of Zaner Metals sees episodic dollar weakness offering a temporary lift, but he insists the dominant force remains the market’s expectation of further Fed restraint. For now, gold remains trapped between a central-bank safety net and a hawkish central bank — a fragile equilibrium that could snap in either direction when the next big data point lands.