Morgan Stanley: Central Banks Accelerate Gold Purchases, But ETF Outflows Cap Rally; Price Recovery Awaits Fed Rate Pause

According to Morgan Stanley's July 20 precious metals report, central banks accelerated gold purchases in June, with China buying 14.9 tons—the largest monthly increase since October 2023 and the 20th consecutive month of purchases. Year-to-date through June, China accumulated 40.1 tons, exceeding 2025's annual total. Poland and Uzbekistan also increased holdings. However, gold ETF outflows of 74 tons in June, primarily from North America, offset central bank demand; North American ETF net outflows reached 60.5 tons year-to-date.

Silver fell approximately 23% this year, compared to gold's 8%, pressured by weakening photovoltaic demand and ETF sales. Morgan Stanley economists expect inflation to continue easing with the Federal Reserve holding rates steady; if correct, ETF inflows could resume in the fourth quarter, potentially pushing gold to $4,450/oz (+11%) and silver to $65/oz (+16%).