European shares fell 2.25 percent in early trade, while the STOXX Europe 600 Banking Index tumbled as much as 4 percent. World stocks hit a fresh 15-month low.
Spot gold was up 0.7 percent at $1,668.19 an ounce at 0907 GMT. Other assets seen as a relatively safe store of value, such as German bunds and the Swiss franc, also climbed.
Investors are still wary towards gold after it was caught up in a broad-based financial market rout in late September, which saw heavy selling of the metal to cover losses on other markets. Prices fell 20 percent from the record $1,920.30 an ounce they hit early in the month.
"There is still potential for further slides should profit taking again set in. I'm not really convinced gold weakness is over," said Commerzbank analyst Eugen Weinberg.
"But gold is definitely living up to its status as a safe haven at the moment. That is very reassuring for investors."
Despite putting in its weakest performance in nearly three years in September, gold still managed to deliver its biggest quarterly gain of 2011 in the third quarter, and is up more than 15 percent so far this year.
This is despite some gains in the dollar, which has inched up 1.5 percent this year versus the euro. Gold is usually pressured by a stronger dollar, which makes it more expensive for other currency holders.
That traditional relationship has broken down since the credit crunch of 2008 as both the dollar and gold were targeted as stores of value. The dollar rose 0.4 percent against a currency basket on Tuesday, in line with gold.
"(Gold's) ability to hold its ground despite EUR/USD trading back down to 1.32 is encouraging," said Swiss bank UBS.
"Gold has separated itself from the wider pack, trading up to a high of $1,678... as it takes strength from the news that Greece will likely have to wait until mid-November before it receives the next aid tranche and little progress made on the enhancement of the (European Financial Stability Fund)."
US gold futures for December delivery were up $14.10 an ounce at $1,671.80.
COMMODITIES SLIDE
Among other commodities, oil and industrial metals like copper and nickel fell as worries over the economic outlook hurt demand expectations for raw materials.
Goldman Sachs reiterated its 12-month gold price target of $1,860 an ounce, at the same as it cut its 2012 forecasts for oil and copper prices.
"As we expect gold prices will continue to be driven in large measure by the evolution of US real interest rates and with our US economic outlook pointing for continued low levels of US real rates in 2012, we continue to recommend long trading positions," it said.
Credit Suisse also raised its 2012 gold price forecast to $1,850 an ounce, saying the metal, as a clear beneficiary of the uncertainty and dislocations in financial markets, has further upside with the crises set to continue.
Among other precious metals, silver prices also climbed, up 1.7 percent at $30.83 an ounce. Spot platinum was down 1.2 percent at $1,479.24 an ounce, while spot palladium was up 1.3 percent at $588.72 an ounce.
Platinum widened its discount to gold to nearly $200 an ounce, an unprecedented level, while the gold:platinum ratio -- the number of platinum ounces needed to buy an ounce of gold -- rose to 1.13, its highest since Reuters data began.
Platinum prices were hurt by a 29 percent hike in CME Group trading margins on platinum futures, as the biggest operator of US futures exchanges moved to tame market volatility.
"Major automakers posted double-digit percentage US sales gains for September.... (but) September car sales in Italy and France were weak, offsetting gains in Germany," said HSBC in a note.
"More than half of annual platinum and palladium demand is from the auto sector where it is a necessary component in the production of catalytic converters and particulate filters."
Copyright Reuters, 2011