* Stocks set for worst losing streak since 2013
* U.S. Q3 economic growth slows less than expected
* Palladium slips off record highs hit on Tuesday (Updates prices, adds comments, details)
By Swati Verma
BENGALURU, Oct 26 (Reuters) - Gold prices rose on Friday towards the three-month highs hit earlier this week as nervous investors retreated from stock markets and piled into the precious metal seen as a refuge from financial turmoil.
Spot gold XAU= was up 0.3 percent at $1,235.16 an ounce at 1346 GMT having earlier this week hit $1,239.68, its highest since mid-July. It is on course for a fourth week of gains. U.S. gold futures GCcv1 rose 0.4 percent to $1,237.6 an ounce.
Global stocks slid again on Friday and were set to post their worst weekly losing streak in more than five years. MKTS/GLOB
"The confusion in bond and stock markets is fuelling some interest in gold. If they continue to fall, that will give support to gold. You'll then have trend buyers coming in and supporting the price," said Alasdair Macleod, head of research at GoldMoney.com.
"The bears are frightened of being caught on the wrong side. The liquidation of short positions on COMEX has the potential in the short term to drive gold up to between $1,260 and $1,270."
Gold prices have gained more than 6 percent after falling to $1,159.96 an ounce in mid-August, their lowest since Jan. 2017.
The release of U.S. growth data earlier, which showed the economy slowed less than expected in the third quarter, had little lasting impact. prices ticked down a little after the GDP report, but popped back up later," said Kitco Metals senior analyst Jim Wyckoff. "We are also seeing some more short-covering in the futures markets which is lifting prices."
Investor flows into bullion, often considered a safe haven and store of value during times of financial, economic and geopolitical uncertainties, 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 now at 24.1 million ounces, holdings are at their highest since the end of August. GOL/ETF
"Gold's impressive performance of late, coming amid U.S. dollar strength, suggests that gold finally is behaving like a safe-haven asset," Societe Generale (PA:SOGN) analyst Robin Bhar said in a note.
A higher U.S. currency typically means dollar-priced gold becomes more expensive for holders of other currencies, which potentially would weigh on demand.
Among other precious metals, palladium XPD= was down 0.1 percent at $1,098.60 an ounce, pulling further away from a record high of $1,150.50 an ounce reached earlier this week.
Silver XAG= was up 0.2 percent at $14.64 per ounce, and platinum XPT= rose 0.7 percent to $828.40 an ounce.