Global economy faces inflation, recession risks; gold investment rises

The global economy is entering a period of heightened instability, characterized by high inflation, sluggish economic growth, and increasing geopolitical tensions. Central banks are grappling with the difficult task of raising interest rates to combat inflation without triggering a deep global recession.

The United States, in particular, is under threat of recession. Inflation reached a three-year high in April, leading markets to expect further interest rate hikes from the Federal Reserve. This trend is pushing bond yields to record levels, making older, lower-interest bonds unprofitable and prompting a sell-off. Investors are also concerned about the sustainability of record US debt, demanding a higher risk premium, while key foreign players like Japan and Gulf nations are divesting from US bonds. China and other developing countries are also reducing their dollar and US bond exposure, shifting assets into gold reserves.

Despite apparent resilience, US economic growth is on shaky ground. Corporate profits are largely driven by price increases rather than genuine purchasing power. Market optimism is heavily reliant on the artificial intelligence sector, which many analysts believe is a financial bubble that could burst, destabilizing the current economic climate.

These global uncertainties and high inflation are also impacting Croatia's domestic economy. Inflation stood at a high 5.8% in April, meaning prices for goods and services were nearly 6% higher than the previous year. This trend significantly affects the purchasing power of Croatian citizens' savings, which amount to over 50 billion euros in bank accounts and cash. Consequently, demand for investment gold as a means of preserving wealth is growing, further supported by favorable gold prices.