Gold bars
Gold bars Lisi Niesner/Reuters

Gold prices slipped modestly Wednesday as stock investors in Europe and the U.S. dumped their holdings and abandoned the euro in a global stampede to safety.

The sparks for the worldwide capitulation was Greece's continued inability to find a head of state, necessary for the debt-choked nation to avoid an almost imminent default plus the once unthinkable prospect of an Italian default.

Yields on Italian government 10-year notes blew past the critical seven percent level that, historically, has been the point beyond which a nation cannot survive financially without an outside rescue.

Prospects that Italy, Europe's third largest economy and the eighth biggest in the world, needs an external rescue to avoid defaulting grew Wednesday as Prime Minister Silvio Berlusconi refused to resign.

In a dramatic measure of Italian anxiety over its debt crisis, Italian President Giorgio Napolitano appeared on television to assure the nation the government will soon approve a financial stability law and find a successor to Berlusconi.

In Greece late Wednesday after three days of intense talks, Greek political bosses failed to name an interim leader as talks bogged down.

The Dow Jones Industrial Average, the Nasdaq Composite and the S&P 500 were all down more than three points, while Europe's major indexes were more than two percent lower.

The euro plunged more than one percent and the dollar skyrocketed 1.8 percent against a basket of major currencies.

European leaders appeared to be looking outside the continent for help.

The global economy has entered a dangerous and uncertain phase, International Monetary Fund head Christine Lagarde said in a public statement in Beijing, according to CNN Money.

If we do not act, and act together, we could enter a downward spiral of uncertainty, financial instability and a collapse in global demand, she said. Ultimately, we could face a lost decade of low growth and high unemployment.

Gold for December delivery slipped $7.60 to $1,791.60 - a mere 0.4 percentage point decline -- while cash gold added $4.66 to 1,788.84.

Silver for December delivery fell 79 cents to $34.36, while cash silver was off 55 cents to $34.43.