Gold rebounded more than 2.5 per cent after falling to
two-year lows and oil cut losses following another sell-off on Tuesday.
The broad rout in commodities seen in recent sessions has been triggered by weak data from China and the United States that have sparked fresh concerns about the strength of the global economy's recovery.
A closely watched survey of German economic sentiment added to the worries after the euro zone crisis and economic weakness were blamed for a larger-than-expected drop in confidence in Europe's biggest economy.
Gold, which has dominated market attention in recent days, was hovering 2.6 percent higher at $1,386.15 an ounce as the near-vertical $230 drop in the past two sessions lured back buyers.
Other precious metals such as platinum and palladium also bounced back along with copper, while silver snapped a four-day losing streak.
Gold's recovery comes a day after it shed $125 an ounce, its biggest ever daily drop. It has now fallen about 20 percent this year after an unbroken 12 years of gains and is some 28 percent down from the September 2011 record high of $1,920.30.
"I think everyone has to take a breath and it's likely that we'll see some rangebound trade. But there are people who still want to sell and they haven't done so yet," said David Govett, head of precious metals at Marex Spectron.
Analysts have cited various reasons for gold's latest slump, including funds switching out of bullion and that other central banks in Europe could use Cyprus's bailout plans sell excess gold reserves as a reason to sell some of their own holdings.
The already sharp correction has caused short-term investors to flee the asset. The SPDR Gold Trust hit its highest ever daily volume on Monday with 92.44 million shares traded. The ETF lost 8.8 percent.
Silver and palladium rose over 6 percent, while platinum gained 4 percent. Copper rose over 1.5 percent to $7,266 a tonne, after hitting $7,085 on Monday, its cheapest since October 2011.
OIL AT $100
Oil, another key commodity that has been caught up in the sell-off, also stabilised.
It had fallen below $100 a barrel for the first time in nine months in Asian trading before the rout eased and before a major 7.8 magnitude earthquake in oil exporter Iran triggered additional buying to leave it at $100.13.
Saudi Arabia, the world's largest oil producer has signalled $100 as the lower limit of its comfort zone and Ian Taylor, head of the world's biggest oil trader Vitol, said on Tuesday that oil prices were unlikely to fall much further for now.
"I think it has done what it is going to do for a while," the Vitol group president and chief executive told Reuters.
U.S. stock futures were up around 0.8 per cent, pointing to a rebound on Wall Street after Monday's 2 per cent drop which came after two bombs ripped through the crowd at the finish line of the Boston Marathon on Monday killing at least three people and injuring more than 100.
The U.S. dollar was broadly weaker but rose 1 per cent against the yen to 97.80 yen, though it was still down about 2 percent from a four-year high of 99.95 yen hit last week following the Bank of Japan's $1.4 trillion stimulus launch announced on April 4.
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