Mumbai, Aug 14 (IANS): Demand for safe haven assets amid uncertain global business environment took the gold price to fresh highs on Tuesday.

The precious metal hit a life-time high of Rs 38,666 per 10 gram after it had surpassed the Rs 38,000 mark for the first time last week.

At the Multi-Commodity Exchange (MCX), the October contract of gold hit a life-time high of Rs 38,666 per 10 gram.

Indian equity indices registered their worst fall on Tuesday in over a month following the decline in Asian peers as turmoil in Hong Kong and Argentina spooked investors.

Gold prices also got a boost due to the depreciation in the rupee, making imports more expensive. The rupee closed at Rs 71.39 to a US dollar, weaker by 60 paise from its previous close of Rs 70.79.

The escalation in the US-China trade tension and US moving to label China a currency manipulator after it allowed the yuan to weaken past the key 7-per-dollar level for the first time in more than a decade, increased fear among investors.

Prices have seen a sharp surge after the US Federal Reserve earlier indicated that its 25 basis point rate cut is a "mid-year-adjustment" and not the beginning of a rate cut cycle.

Fear of a global recession also played its role in the surging gold prices.

Warning signals are also coming via other reliable indicators of recession: the bond yield curve. The yield curve has typically inverted before recessions and it is now nearly similar to what was seen ahead of the 2008 financial crises.

Morgan Stanley believes if the trade war further soars via US further raising tariffs on all goods imported from China to 25 per cent, "we would see the global economy entering recession in three quarters".

The Reserve Bank of India had also lowered India's GDP growth projection. RBI Governor Shaktikanta Das said it was warranted by various high frequency indicators pointing to weakening of both domestic and external demand conditions.