Gold closes at record high

Investors pushed gold to a record close Tuesday, turning cautious just a day after they cheered a plan to give the euro a $1 trillion backstop.

The euphoria abated as traders on world markets began to wonder how much long-term relief the package will provide, and looked for safety in gold as a store of value.

June gold closed up $19.50 at $1,219.90 US an ounce. The Canadian dollar's official close was up 0.24 of a cent to 97.87 cents US.

North American stock markets ended mostly higher. In Toronto, the benchmark S&P/TSX Composite Index closed up 52.71 points at 12,000.61. Debt fears held back many sectors, but gold stocks managed to buoy the overall market.

"Europe is a mess and will continue to be one," Patrick Kerr, managing director at Amerifutures, a commodity futures and options brokerage, said. "The rescue package officially puts the European Central Bank in the money printing business, and print, print, print, they are."

The Dow Jones industrial average closed 36.88 points higher, at 10,748.26, while the Nasdaq composite index added 0.64 of a point to 2,375.31 and the S&P 500 index slipped 3.94 points to 1,155.79.

'Europe is a mess and will continue to be one.' —Patrick Kerr, Managing Director, Amerifutures

In Europe, the FTSE 100 index of leading British shares closed down 53.21 points, or one per cent, at 5,334.21, while Germany's DAX ended the day up 19.80 points, to 6,037.71. The CAC-40 in France was 27.09 points lower at 3,693.20.

"Yesterday's burst higher is already looking short-lived amidst concern over a wide range of issues," said Ben Potter, research director at IG Markets. "Without doubt when gains of five per cent or more are seen in a single day a degree of reversion is perhaps to be expected."

North American markets shrugged off a troubling inflation report out of China that showed the cost of living was increasing at its fastest pace in two years, sparking fears of rates cuts that would slow growth.

Such a scenario was particularly bad news for the TSX, which is heavily weighted in resource stocks that have benefited from the strong Chinese economy.

"That's another factor on our list of things to be concerned about in terms of the global economic recovery," said Steve Uzielli, portfolio manager and director at ScotiaMcLeod Equity Advisory.

"Progress has been made, but the whole sovereign debt looks very like a can of worms," said David Buik, markets analyst at BGC Partners.