Gold hit $2,141.79 per ounce to break a record it had reached in December
Gold hit $2,141.79 per ounce to break a record it had reached in December AFP

The price of gold on Tuesday struck an all-time pinnacle, boosted by its haven status ahead of expected cuts to US interest rates amid growing economic gloom.

Shortly after 1330 GMT, gold advanced to $2,141.79 per ounce, surpassing its prior peak of $2,135.39 that was struck in early December, before pulling back slightly.

Gold, whose twin drivers are jewelry and investment buying, has now gained about 15 percent in value since the same stage last year.

"Concerns surrounding global economic prospects, geopolitical tensions, and shifting expectations towards earlier interest rate cuts have fueled increased demand for the precious metal, leading to its upward price trajectory," said ActivTrades analyst Ricardo Evangelista.

"Of these factors, US interest rates stand out as the primary risk factor influencing gold prices, with the potential upside constrained by uncertainty surrounding the Federal Reserve's plans to unwind its restrictive monetary policy."

This week's strong advance was partly triggered by weak data published before the weekend.

US manufacturing activity contracted in February more quickly than markets expected, an industry survey showed Friday, as demand slowed and output eased.

The Institute for Supply Management said its manufacturing index stood at 47.8 percent last month, down from 49.1 percent in January.

This was significantly below market expectations, according to Briefing.com, and kept the index below the 50-point marking separating expansion from contraction for the 16th month in a row.

That stoked market expectations that the Fed could move more quicky than expected to lower borrowing costs in order to stimulate economic activity.

"Gold continues its upward trajectory," added Commerzbank analyst Thu Lan Nguyen, who also sounded a note of caution.

"As there is still a lot of uncertainty about the start and extent of the next interest rate cut cycle in the US, we think the rally is fragile.

"We would not be surprised to see a small downward correction in the coming days on the back of profit taking."