Gold Busts 4-Day Losing Streak on Safe Haven Buying

Gold prices broke a four-day losing streak Tuesday as investors worried about a possible liquidity crisis in the Eurozone sought protection for their money in the yellow metal.

The rise in gold came despite stocks falling. In recent months gold has moved in the same direction as stocks because investors seeking safety have been choosing the dollar over gold, which historically has been a safe haven.

But throughout Tuesday's trading session, gold remained in positive territory as European equities fell. Germany's DAX stock index, for example, closed down 1.2 percent while gold on the Comex settled 1.4 percent higher.

In the U.S. stocks were mostly down in late afternoon trading. The Dow Jones Industrial Average was down 29.63 to 11,517.68, the Nasdaq Composite gained 3.22 to 2,526.36 and the S&P 500 slipped 1.52 to 1,191.46.

Gold also shook off a disappointing report on third-quarter gross domestic product, which grew at a slightly slower pace than previously estimated.

Investors were fleeing to gold as the interest rate on borrowing for the weakest Eurozone economies soared. The cost to Spain of short-term borrowing rose to a 14-year high, and the interest rate on its 10-year bond was nearly as high as the already lofty interest on Italy's 10-year bond. French and Belgian bond yields also were rising dangerously.

The inability of Eurozone leaders to make progress in their fight against the two-year-old Eurozone sovereign debt crisis is sending the borrowing costs of Greece, Portugal, Ireland, Spain and Italy to record levels.

The heavy exposure of European banks to the debts of Greece, Italy, Spain and Portugal has raised the specter of a Lehman Brothers-like liquidity freeze. In view of that possibility, the International Monetary Fund on Tuesday offered the Eurozone's stronger economies easier access to its cash through a newly streamlined credit facility.

Besides the flight to safety from a possible Eurozone liquidity crisis, gold rose on bargain hunting.

The dollar was highly volatile during the trading session but in late afternoon trading was off 0.1 percent to 78.46 against a basket of major currencies.

Gold for December delivery closed up $23.80 to $1,702.40, while spot gold rose $25.84 to $1,702.59.

Silver for December delivery settled $1.55 higher at $32.66, while spot silver added $1.66 to $32.89.