Gold climbed to a record high on Thursday as investors fled to safe-haven assets sparked by fears that Europe's debt crisis could spread to France, while oil reversed early losses.
The euro's financial woes returned to focus on rumours France may be in trouble, stealing the spotlight from the U.S. Federal Reserve's promise to keep interest rates low for at least another two years.
"It all appears to be about confidence," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney. "Each bit of negative news erodes confidence and that erodes demand."
Although they were denied, rumours of an impending downgrade of France's credit rating and the financial health of a key bank in the country rattled markets, sending U.S. stocks tumbling more than 4 percent on Wednesday.
Futures markets were predicting a sharp rebound when European and U.S. markets open later on Thursday, helping to limit losses in Asian shares.
The S&P 500 dropped 4 percent on Wednesday, hurt by Europe's debt worries.
Spot gold hit an all-time high of $1,813.79 an ounce, while U.S. gold also hit a record of $1,817.60.
The relative strength index for spot gold briefly rose above 85, the highest since October 2010, suggesting a heavily overbought market.
"Gold remains the last protection against the potential for widescale money printing as governments seek to recapitalise their banks and restimulate their economies," UBS said in a research note.
Brent crude oil LCOc1 briefly fell more than a dollar to an intraday low of $105 a barrel on demand worries, but has since recovered and was trading up 33 cents at $107.01 a barrel by 0633 GMT.
Brent has fallen around 4 percent since ratings agency Standard & Poor's cut the top-tier credit rating of the United States on Friday.
The worsening economic outlook for developed countries overshadowed a drawdown of 5.23 million barrels in U.S. crude stocks, which confounded analysts' expectations for a 1.5 million barrel increase.
"Market sentiment appears to be outweighing market fundamentals, which is likely to create bouts of overshooting on the downside for commodities," said analysts at ANZ Bank in a research note.
"We expected the fundamentals vs. sentiment theme to drive prices in the near term."
Copper rose 3.1 percent to $8,861.25 a tonne, supported by China's strong July trade figures.
China's exports hit a record high in July as shipments to Europe and the United States proved surprisingly buoyant, allaying concerns that debt problems abroad may hold back the world's No. 2 economy.
In agricultural markets, U.S. corn and soybeans rose ahead of a key U.S. government report, which analysts expect to be bullish for grains.
Chicago Board of Trade actively traded November soy rose 0.7 percent to $13.10-3/4 a bushel, while December corn gained 0.4 percent to $6.91 a bushel. (Editing by Sugita Katyal)