Gold and silver prices settled higher Wednesday as investors extended their retreat from stocks and bid up the precious metals on fears that France's sovereign debt would be the next nation's credit to be downgraded.

Gold for August delivery settled $41.30 to $1,781.30, and silver ended $1.45 to $39.33.

That increase in prices along with fresh worries about a possible downgrade of France's sovereign debt lifted the shares of precious metals producers. Barrick Gold Corp. (USA) closed up $1.92, or 4 percent, to $49.66 and Goldcorp Inc. (USA) added $2.41, or 5 percent, to settle at $50.54. Among silver producers, Silver Wheaton Corp. climbed $1.37, or 3.87 percent, to $36.81 and Pan America Silver Corp. (USA) increased 29 cents, or 1 percent, to end the day at $29.08.

Meanwhile, all three major U.S. stock indices fell more than 4 percent.

Shares of French banks slumped as much as 20 percent as fears about the currency bloc's debt crisis moved back to the forefront. President Sarkozy interrupted a vacation to return to Paris where he ordered the government to trim the nation's public debt.

With governments and central banks running out of tools to combat the financial and economic distress, some analysts are now looking for gold to keep running toward $2,500, which would just top the inflation-adjusted peak of three decades ago.

"The skies would appear to be clear for these safe havens like gold," said Andrew Wilkinson, senior market analyst at Interactive Brokers Group, Greenwich, Conn. With the debt woes spilling over into the world's biggest economics, "we don't know where this thing is going to stop anymore."