* Stocks set for worst weekly losing streak since 2013
* Gold heading for fourth weekly gain
* Palladium slips off record high hit on Tuesday (Recasts; updates prices, adds comments and details)
By Sethuraman N R
Oct 26 (Reuters) - Gold rose on Friday to a more than three-month peak as investors rushed to the safety of bullion as stock markets around the globe plunged, putting the metal on track for its fourth week of gains.
Spot gold XAU= rose 0.2 percent to $1,234.35 an ounce at 14:10 p.m. EDT (1810 GMT), having earlier gained nearly 1 percent to $1,243.32, its highest since mid-July. U.S. gold futures GCcv1 settled up $3.40, or 0.28 percent, at $1,235.80.
Spot gold was on course for a fourth weekly gain, its longest winning streak since January.
"We continue to see money flows out of riskier equity markets into safe-haven asset classes. That is one of the main drivers of this (gold) market," said David Meger, director of metals trading at High Ridge Futures.
Stocks worldwide spiraled downward on Friday and were set to post their worst weekly losing streak in more than five years. MKTS/GLOB
"With the extreme slide in stocks, gold became a temporary safe haven. But event driven rallies don't last long and the metal pared gains as stocks gave up some losses," said George Gero, managing director at RBC Wealth Management.
"Bonds have also become safe haven with stocks getting sold-off. The dollar is still pretty high, which is a headwind for gold as it makes the metal expensive in major consumers like India," Gero said, adding that interest rate increases by the U.S. Federal Reserve will be a another challenge for gold.
Rising rates are normally negative for gold because they increase the opportunity cost of holding non-yielding bullion and could boost the dollar, in which gold is priced.
Gold demand in India this week was muted as a recent rally in domestic prices prompted buyers to postpone purchases despite the approaching festival and wedding season. prices are up more than 6 percent after falling to $1,159.96 an ounce in mid-August, the lowest since January 2017.
"We are also seeing some more short-covering in the futures markets, which is lifting prices," said Kitco Metals senior analyst Jim Wyckoff.
Investor flows into bullion, considered a safe store of value during times of financial, economic and geopolitical uncertainty, can be seen by the rise in holdings of physically-backed exchange traded products.
Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust GLD , saw outflows of about 4.5 million ounces between late April and early October. But holdings are now at their highest since the end of August, at 24.1 million ounces. GOL/ETF
Among other precious metals, palladium XPD= was up 0.5 percent at $1,105.22 an ounce, after reaching a record high of $1,150.50 an ounce earlier this week.
Silver XAG= was up 0.1 percent at $14.63 per ounce, and platinum XPT= 1.2 percent higher at $832.50 an ounce.