Gold prices rose to their highest level in more than a week Wednesday, as stocks fell in Europe and opened lower in the U.S. on news of Italy slipping back into recession and tensions in Ukraine. Gold for December delivery, the most actively traded contract, was recently up $18.70, or 1.45%, at $1,304.10 a troy ounce, the highest price since July 29. Italy fell back into recession for the third time since 2008, data showed Wednesday, signaling that the euro zone's recovery has hit a major stumbling block. The country's gross domestic product declined 0.2% in the second quarter of 2014, missing expectations. The news buoyed gold, an asset that some investors seek out in times of political and economic instability, believing it will hold its value better than other assets. The rise in gold continued a rally sparked Tuesday afternoon, when Polish Foreign Minister Radoslaw Sikorski said Russian troops are poised to "pressure or invade Ukraine," causing gold prices to reverse losses and head higher in aftermarket electronic trading. Conflicts in Ukraine and the Middle East have helped buoy gold prices in recent months, even as the market has been weighed down by expectations that the Federal Reserve may tighten monetary policy sooner than expected. "The weakness in the equity markets, the conflict in Ukraine, all of it is putting people on edge," said Peter Hug, director of precious metals at Kitco. Gold's surge could force some investors who had bet on lower prices to cover their bets and buy back the metal, sending gold higher in a phenomenon known as a short squeeze, Mr. Hug said. In other markets, silver rallied 0.8% to $20 a troy ounce in the most actively traded September futures contract. Gold and silver often move in the same direction, as some investors view silver as gold's cheaper cousin and purchase it as both a currency alternative and a store of value.

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