Photo illustration shows one-tael gold cubes at a jewellery store in Hong Kong
Consumers should look to buy the dips in gold as any price weakness is likely to be short-lived, Standard Chartered bank said in a note. Gold fell below $1,600 an ounce on Wednesday. Reuters

Gold set a record high Tuesday and Wall Street stocks fell on fresh concerns over weakness in Europe's biggest economy, doubt that the Continent's leaders can fix their sovereign debt problems and more evidence of just how anemic the U.S. economy is.

On the CME Comex division of the New York Mercantile Exchange gold for December delivery, the most heavily traded contract, rose $27 to settle at $1.785. Silver also gained, rising $5.11 to $39.85 for December delivery.

The German economy grew a seasonally adjusted 0.1 percent during the second quarter, compared with a seasonally adjusted 2.7 percent increase in the same period last year. Analysts expected a 0.4 percent growth rate.

The leaders of France and Germany agreed to float proposals in September for a tax on financial transactions and push for closer joint governance of economic policy, but that did little to boost investor confidence that the Greek contagion will not spread to Italy or even France.

Meanwhile, in the U.S. data from the Commerce Department showed that residential real estate is contributing little to U.S. growth. New construction of homes and apartment buildings in July fell 1.5 percent from a month earlier to a seasonally adjusted annual rate of 604,000. The figure was better than the expected 4.6 percent drop to an annual rate of 600,000, but still underscores the weak domestic housing market.

U.S. stocks were falling in late afternoon trading. The S&P 500 index of large stocks fell 17.06 to 1,187.43.

Although U.S. stocks fell, the price of exchange-traded funds that are backed by physical gold rose. SPDR Gold Trust and iShares Gold Trust were both up about 1 percent.

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