The price of gold climbed close to its record high on Wednesday with the precious metal boosted by its safe-haven status.

Gold hit a two-month high of 1,254.73 dollars an ounce on the London Bullion Market. It later pulled back to 1,249.55 dollars, compared with 1,246 dollars late on Tuesday.

"The rally from the late-July lows of 1,160 dollars has been very powerful and it does look like the market is intent on taking out the previous highs," said Rajesh Patel, head trader at Spread Co in London.

"With reports of hedge fund managers increasing their holdings in the precious metal, we still maintain our target of 1,300 dollars before the end of the year."

The precious metal hit a record 1,265.30 dollars per ounce on June 21, propelled partly by concerns over the poor economic climate, before falling back.

However, since July it has risen steadily amid growing fears over the faltering US economic recovery.

"Whether deflation or inflation, economic slowdown or acceleration, gold appears to be the ultimate investment for all eventualities at the moment," said Commerzbank analyst Eugen Weinberg.