The Gold Price rose to $1725 per ounce Thursday lunchtime in London – 5.1% above where it started the week – following a mid-morning dip.

Silver Prices continued to see-saw around $33.50 per ounce – 6.7% up for the week so far.

Stock markets meantime surged throughout the morning following news of an agreement between Eurozone leaders at yesterday's crisis summit.

Commodity prices also rallied strongly, while government bonds sold off.

"The optimism could soon fade, which could see participants once again adopt a risk-off stance," warns Marc Ground, commodities strategist at Standard Bank.

"However, given gold's close co-movement with equities recently (the last few days excluded), it is uncertain whether the metal will benefit from a market returning to risk aversion."

The Gold Price "has come under some pressure," adds Nikos Kavalis, commodities strategist at Royal Bank of Scotland.

"But [it] has been supported by good buying from private banks."

Private sector creditors will take a nominal loss of 50% on their Greek bond holdings, Eurozone leaders agreed early on Thursday morning, following eight hours of negotiations.

"Together with an ambitious reform program for the Greek economy, the [50% haircut] should secure the decline of the Greek debt to GDP ratio with an objective of reaching 120% by 2020," said the official Euro Summit Statement.

Banking sector representatives had previously offered to accept a haircut of 40%.

Eurozone leaders, however, invited the banks' representatives to yesterday's summit "not to negotiate, but to inform them on decisions taken by the 17 [Eurozone member countries]," French president Nicolas Sarkozy said.

Politicians threatened "to move toward a scenario of total insolvency of Greece, which would have cost states a lot of money and which would have ruined the banks," according to Luxembourg's prime minister Jean-Claude Juncker – who chairs the Eurogroup of single currency finance ministers.

The European Central Bank has repeatedly said any losses should be voluntary in order to avoid a credit event – which could trigger payments on credit default swaps, derivative contracts that act as a form of bond insurance.

However, "as far as the analysis for CDS purposes goes [this agreement] doesn't change things," reckons David Geen, general counsel trade body the International Swaps and Derivatives Association.

"As far we can see it's still a voluntary arrangement and therefore we are in the same position as we were with the 21% [haircut] when that was agreed [in July]." 

Politicians also agreed to "leverage the resources" of the Eurozone's bailout fund, the European Financial Stability Facility – up to a reported €1 trillion, according to some reports. It remains unclear, however, exactly how this will be done. 

"It will be important to detail further the modalities of how this enhanced EFSF will operate and deliver the scale of support envisaged," said Christine Lagarde, managing director of the International Monetary Fund.

One option – approved by the German Bundestag yesterday – involves using EFSF funds to part-insure new government bonds issues. The other would see the EFSF set up a special purpose vehicle which would seek investment from "a combination of resources from public and private financial institutions and investors," according to the official statement.

"The EFSF will have the flexibility to use these two options simultaneously," the statement added.

Sarkozy was due to speak to China's president Hu Jintao this afternoon, while Klaus Regling, chief executive of the EFSF, is expected to fly to China tomorrow.

Other members of the BRICS – the group of emerging nations that comprises Brazil, Russia, India, China and South Africa – are however reportedly reluctant to provide funding directly to Europe.

"Brazil is not considering it," the country's finance minister Guido Mantega said yesterday.

"I believe that European countries do not need funds from Brazil to buy bonds...They have to find solutions to the European problems within Europe."

Europe's leaders also agreed that the continent's banking sector requires "a significantly higher capital ratio of 9%." Banks will have until the end of June next year to raise fresh capital.

"Banks should first use private sources of capital...[and they] should be subject to constraints regarding the distribution of dividends and bonus payments until the target has been attained. If necessary, national governments should provide support, and if this support is not available, recapitalization should be funded via a loan from the EFSF in the case of Eurozone countries."

France's central bank reports that the country's four largest banks – which make up 80% of the French banking sector – will need to make up a combined shortfall of €8.8 billion to meet the new requirement. Germany's Commerzbank says it needs €2.9 billion.

Despite this, banking stocks were the biggest gainers as European stock markets rallied strongly Thursday morning – with Germany's DAX up over 4% by lunchtime.

"While the headlines look good, the devil is in the details," warns Damien Boey, Sydney-based equity strategist at Credit Suisse.

"On a long view, I'm bearish on the end-game for all the highly indebted economies (including Europe, the US, Japan and the UK)," adds Gerard Minack, chief market strategist at Morgan Stanley.

"There is no historical precedent for economies as indebted as these to avoid default. There are two ways to default: open default typically associated with recession/depression, or surreptitious default associated with inflation/hyper-inflation."

"The deal isn't the game changer," says Dominic Rossi, chief investment officer at Fidelity.

"The eye of the storm will now move to Rome and its fragile government...Italy's 120% debt-to-GDP doesn't look any more sustainable today than yesterday. Europe is destined for a multi-year workout during where economic growth will be very restrained."

Away from Europe, provisional US third quarter economic growth data are published this afternoon, with most analysts forecasting a slight improvement on Q2's 1.3% year-on-year GDP growth.

"With the heat off Europe for the moment, todays US economic data could be the news to look out for," reckons one London-based Gold Bullion dealer. 

"Markets will be particularly keen to see whether GDP will meet or surpass the predicted improvement, but expect a wobble if figures fall short."

Want to buy bullion as near as possible to the spot Gold Price? Find out how BullionVault's unique live market can help you...