Gold prices on Wednesday surpassed the Rs 38,000 per 10 grams mark for the first time ever, amid heightened trade tension between US and China and marked slowdown in global economic activity.

Gold has seen a sharp surge in demand as a safe haven asset, ever since the US Federal Reserve’s statement that the first rate cut since 2008 was not the beginning of a rate cut cycle.

At the Multi-Commodity Exchange (MCX), the October contract of gold was trading at Rs 37,956 per 10 gram before it hit a lifetime high of Rs 38,070.

Prices of the precious metal surged after the US last week announced fresh tariffs on Chinese products. Later, China decided not to buy US agricultural products as a response to this escalation.

On Wednesday, the Reserve Bank of India’s Monetary Policy Committee (MPC) lowered the economy’s projection of real GDP growth to 6.9 per cent for 2019-20 from 7 per cent earlier.

The downward adjustment in the GDP growth projection, RBI Governor Shaktikanta Das, said was warranted by various high frequency indicators pointing to weakening of both domestic and external demand conditions.

The rise in gold prices comes at a time when the rupee too, is seeing its lowest levels since September 2013. On Wednesday, the rupee opened at 70.98 against the US dollar, which is 15 paise down. In the past four sessions, the rupee lost 202 paise. This year, the currency has declined 1.3%.

On Tuesday, the Indian rupee weakened to 70.82 per US dollar from its previous close of 70.7350.

Global cues, such as a rise in protectionist measures along with a massive fall in the Chinese yuan and other emerging markets (EMs) currencies, kept the Indian rupee subdued. China’s central bank set its daily fixing near 7 a dollar, causing currencies to trade lower. In other global markets, after Reserve Bank of New Zealand cut its benchmark interest rate by 50 basis points, its dollar plunged more than 1% as the interest rate cut was higher than expected.