Oil was hovering around a five-year low on Tuesday, but gold made a sharp recovery, up $14 US an ounce to $1197.
Gold spiked $22 in morning trading, breaking through the key $1,200 an ounce level, before sinking lower just before the close.
Investors are seeking out bullion as a safe haven amid uncertainty over European economies and the U.S. dollar. They are concerned about a pending Greek election, which could threaten that country's troubled economy, as well as signs of imminent recession in Russia.
The Canadian dollar moved higher to close at 86.14 cents US after falling yesterday on low oil prices.
The crude contract traded in New York is down 50 per cent since its 2014 high of $107.26 in June. On Tuesday West Texas Intermediate oil was up 14 cents at $53.83 US a barrel, its lowest level since May 2009.
Brent oil, the contract traded in most of the world, slipped by 20 cents to $57.68 and Western Canada Select was trading at a deep discount to the WTI price, $37.55.
Crude oil contracts have fallen due to a glut of oil production and a dampening of global demand as world economies slow.
Tomorrow, the U.S. energy agency will release its survey of oil and natural gas inventories in the U.S. and traders expect to find the oversupply remains.
"What we've seen for the past couple of weeks is inventories are still rising... it could be that we're looking at these low prices as a chance to build our inventories in case the prices do go higher later, and we're piling in at lower levels," said Carl Larry, an oil and gas consultant at Frost & Sullivan.
He said the Canadian industry hasn't been as hard-hit as it might be, because U.S. demand is rising.
"The interesting thing about what's going on with Canada is that, although prices have been going lower, and this goes for the U.S. too, is that demand's been at a record high. This past year, we put more crude oil into our refinery system than we have ever. And what's happening is we're bringing a lot of the imports down from Canada, because they replace a lot of the imports that we bring into the Gulf Coast," he said in an interview with The Exchange with Amanda Lang.
Toronto stocks were lower in the morning, dragged down by the energy sector. They recovered in the early afternoon, but closed the day down 23.88 points at 14,640.04.
Gold stocks and base metals climbed because of the soaring price of gold, with the metals and mining index up five per cent.
However financial and consumer related stocks moved lower, despite good news about consumer confidence.
The Conference Board of Canada index of consumer confidence showed a rebound in confidence in December, after three months of declines in the index.
The results, released Tuesday, indicated consumers are happier about their finances and more willing to make a major purchases, a positive sign for the retail sector.
In New York, the Dow was down 55.16 points to 17,983.07, the S&P 500 was down 10.22 points at 2,080.35 and the Nasdaq fell 29.47 points to 4,777.44.
New York stocks followed European markets downwards. Greece's early election set for January has increased doubts about the eurozone's economic prospects and the ability of the European Central Bank to reverse the current downturn.
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