Despite the killings after the army fired live ammunition at the crowds, the mood in Manama is one of staunch defiance

Ali Ismail had helped wash the body of a dead protester for burial and he was already talking of more blood. "We will go to them and they will attack us," he said of Bahrain's riot police. Within hours he was proved correct.

Just after 5.30pm on Friday, central Manama again erupted in gunfire and screaming. Up to 200 demonstrators had attempted to march on Pearl Square, the scene of Thursday morning's savage assault that left three dead. Just over a mile from the central Bahrain landmark, soldiers and police opened fire, killing at least one more protester and leaving 50 others wounded.

"We don't care if they kill 5,000 of us," a protester screamed inside the forecourt of the Salmaniya hospital, which has become a staging point for Bahrain's raging youth. "The regime must fall and we will make sure it does."

Just before dusk, riot police advanced on the hospital, apparently chasing protesters who had attempted to link up with the group bound for Pearl Square. Sound grenades cracked in the distance, gradually getting closer as protesters beat a retreat to the only place in Manama where they now feel safe to gather in numbers.

Within minutes, the bitter scent of tear-gas had wafted into the hospital grounds, sparking panic that the riot police were coming for them there as well. The police backed off and the crowd in the hospital swelled to at least 7,000 people, all of them chanting anti-regime slogans that they would not have dared to utter a month ago.

"Down with the king, down with the Khalifas," they cried, referring to the kingdom's ruling family. Anger among the overwhelmingly Shia Muslim demonstrators towards the Sunni dynasty that has ruled Bahrain for more than 200 years is now virulent.

"They have done nothing for us in the past except discriminate against us," said one nurse, sobbing against a hospital gurney. "Now their new trick is to kill us."

Inside the hospital I saw a young man being wheeled into a makeshift trauma room, which is usually used to conduct angiograms. The gurney was soaked in blood and he had been shot in the head.

"There are at least two bullets. I don't think he will live," said a young doctor as he left the room.

He didn't.

The man's death takes to at least five the number killed during clashes with police since Wednesday. Scores more have been injured. Most of those brought to the emergency ward had wounds from rubber bullets, although at least one youth had a gaping wound to his calf that specialists said was caused by a live round.

The early evening clashes brought a dramatic end to a day that had started off with three large funeral rallies through the suburbs of Manama. More than 50,000 demonstrators attended – between 5% and 10% of the tiny kingdom's population.

They were among the biggest public rallies the Arab world's smallest state has ever seen. At the largest of them, in the suburb of Sitra, around 25,000 mourners marched in a long looping column to a graveyard, demanding that the regime be changed.

"No to Sunni; no to Shia," they cried at one point. "We are all Bahraini."

Mahmoud Muhim, the father of one of the dead protesters, took the microphone during the march and said: "Not one person has offered me commiserations. Everyone has said congratulations, because I now have a martyred son. He died for Bahrain."

At the graveyard there was talk of a move to reclaim Pearl Square, which has become for Bahrain what Cairo's Tahrir Square was for Egypt, but not until organisers could figure out a way to deal with a military and police force that had been ordered to show no mercy to dissenters.

"They are not loyal to us – they are loyal to the regime," said Mohammed al-Waeli after Friday prayers near the grave. "We don't have a single weapon anywhere. It is impossible to get one, even if we wanted to."

Plans were made to advance on the square on Saturday morning in a bid to show the government that they have no intention of surrendering. However, the spontaneous rush for the site on Friday night had forced organisers to rethink.

The Bahraini royal family, which on Friday night made several public statements after the latest violence, is also taking stock.

"We need to calm down, all of us," said Crown Prince Salman al Hamad. "I urge you, there should be calm. Now is the time for calm."

The message was not well received in the hospital grounds, where ambulances – those that had been allowed to return from the site of the clashes – were slowly making their way back with more wounded.

"They know they have done too much this time," said Fatima al-Khaled. "And we know that if we back down they will see us as weak."

Late in the afternoon another rally took place in central Bahrain – a pro-government demonstration sanctioned by authorities despite an order from the military banning public gatherings. Government loyalists drove through the streets surrounding the city's largest mosques, waving Bahraini flags and posters of the ruling family.

Government loyalists also filled Manama's grand mosque to hear words of support for the monarchy and take part in a post-sermon march protected by security forces. Many arrived with Bahraini flags draped over their traditional white robes. Portraits of King Hamad bin Isa Al Khalifa were distributed.

"We must protect our country," said Adnan al-Qattan, the cleric leading prayers. He denounced attempts to "open the doors to evil and foreign influences", an apparent reference to suspicions that Iran could take advantage of any gains by Bahrain's Shias, who account for about 70% of the population.

The pro-government gathering had many non-native Bahrainis, including south Asians and Sunni Arabs from around the region.

Bahrain, which hosts the US Fifth Fleet and has traditionallyenjoyed strong relations with Europe and the US, stands to lose a lot from this crisis. The Formula One grand prix, scheduled for 13 March, is already in jeopardy; a decision on its fate will be made by Wednesday.

But of more enduring concern for the ruling elites is strident criticism from the United Nations and biting silence from the Obama White House, which is under increasing pressure to intervene in the crisis, in the same manner as it did in Egypt during Hosni Mubarak's last days in power.

"If the US walks away from us, this regime will continue to come for us," said Ismail in the shadow of the graveyard. "There is no option but to press ahead. This is our moment."