* Bounces off session low of C$1.0662
* Commodity backdrop helps steer turnaround (Adds closing dollar and bond prices)
TORONTO, Dec 14 (Reuters) - Canada's currency edged higher on Monday, clawing back from an early drop to its lowest level in three sessions, boosted by a rising gold price and some stability in oil after recent declines.
The turnaround in the Canadian currency was also helped along by a weaker U.S. dollar as Abu Dhabi's decision to throw neighboring emirate Dubai a $10 billion lifeline to repay debts slowed safe-haven buying of the greenback.
That all helped the domestic currency rally as high as C$1.0568 to the U.S. dollar, or 94.63 U.S. cents.
Earlier it had fallen to C$1.0662 to the U.S. dollar, or 93.79 U.S. cents, which added to a sharp slide on Friday and marked its lowest level since Dec. 9.
"It just felt to me like some of the move from Friday was taken back," said Steve Butler, director of foreign exchange trading at Scotia Capital. "We're now at a bit of a crossroads on whether or not the U.S. dollar continues to strengthen."
The Canadian unit closed at C$1.0593 to the U.S. dollar, or 94.40 U.S. cents, up from C$1.0599 to the U.S. dollar, or 94.35 U.S. cents, at Friday's close.
Gold prices were up 0.7 percent, while oil prices steadied after earlier falling to their lowest level since Oct. 5. [GOL/][O/R]
Both oil and gold are key Canadian exports whose prices often influence the country's currency.
BONDS LOSE SAFE HAVEN BID
Canadian bond prices were slightly lower as investors snapped up riskier assets like equities on hopes for more acquisitions in the energy sector following Exxon Mobil Corp's XOM.N deal to buy XTO Energy Inc XTO.N.
The two-year Canadian government bond CA2YT=RR fell 3 Canadian cents to C$99.985 to yield 1.26 percent. The 10-year bond CA10YT=RR fell 17 Canadian cents to C$102.77 to yield 3.4 percent.
Canadian bonds put in mixed performance against Treasuries, with the 10-year yield narrowing to 14.3 basis points below its U.S. counterpart from 16.1 basis points the previous session. (Reporting by Frank Pingue and Jeffrey Hodgson; editing by Peter Galloway)