The Gold Price rose to $1736 per ounce in early London trading – 3.1% above Tuesday's low – before easing back, while European stocks halted recent falls but failed to stage a convincing rally following news that the Greek prime minister had been summoned to France to explain himself after calling for a referendum on Greece's bailout.

"This latest development...will make markets that much more skeptical of the reassurances that inevitably will be offered by other Eurozone leaders in the coming days," says one Gold Bullion dealer here in London.

"The medium term trend in the Gold Price remains bullish," adds Commerzbank technical analyst Axel Rudolph, "while [gold is] trading above the $1595.65 October low."

Silver Prices hovered around $33.80 per ounce – 4.3% down for the week so far.

On the futures markets, prices for most commodities edged higher, while US, UK and German government bonds all sold off.

The Euro rallied against the Dollar after three days of losses – though it remains significantly below where it was a few days ago.

Greek prime minister George Papandreou was summoned to Cannes on Wednesday for a meeting with German chancellor Angela Merkel and French president Nicolas Sarkozy, ahead of the G20 summit.

The meeting follows Papandreou's call for Greece to hold a referendum on the bailout package agreed last week.

The Greek cabinet last night backed Papandreou's referendum call – although some ministers reportedly expressed their reservations, but decided to back the government ahead of a confidence vote scheduled for this Friday.

"The dilemma isn't 'This or another government'," Papandreou told his ministers on Wednesday before heading to Cannes.

"The dilemma is 'Yes or no to the loan accord', 'Yes or no to Europe', 'Yes or no to the Euro.'"

"Giving the people a say is always legitimate," French president Nicolas Sarkozy said last night.

"But the solidarity of all countries of the Eurozone cannot work unless each one consents to the necessary efforts...[last week's deal] is the only way to solve Greece's debt problem."

"[The deal to which] we just agreed last week cannot be placed back on the table," added German foreign minister Guido Westerwelle.

Last week's agreement included a 50% 'haircut' on private sector-held Greek bonds.

However, points out Michael Kemmer, head of Germany's banking lobby, "I can't imagine a debt exchange taking place before the referendum."

The Greek government says the referendum will take place "as soon as possible", once the details of the bailout are known.

The Euro rallied over 2% against the Dollar last Thursday after the deal was announced. Since then, however, it has fallen by over 4%.

The Euro Gold Price on Wednesday morning meantime were around 3% higher than last Thursday's low.

Elsewhere in Europe, a €3 billion auction of European Financial Stability Facility bonds scheduled for today has been postponed, with the lead managers on the issue citing "recent market volatility".

Klaus Regling, EFSF chief executive, last week travelled to China and Japan to present the advantages of investing debt issued by the triple-A rated Eurozone bailout fund. Neither country committed to buying bonds.

Italian 10-Year government bond yields remained above 6% Wednesday morning despite retreating from Tuesday's highs. 

Yields on shorter-dated debt meantime have risen sharply since last Thursday. Italian 6-Month Treasury Bill yields have risen from 3.5% to 4.5%, while 12-Month have gone from 3.8% to nearly 5.2%.

Back in July, Italy cancelled an auction of medium and long-dated bonds scheduled for August, announcing that 12-Month Bills would be regularly offered instead.

German unemployment meantime rose in October by 10,000 people – the first monthly unemployment rise since February 2010 – according to official data released this morning.

"People who hadn't realized before should realize now that Europe's issues will continue to be troublesome and difficult," says Jeremy Friesen, Hong Kong-based commodities strategist at Societe Generale.

"There will continue to be risks, which will put more and more pressure on central banks...to be more accommodative," a development which Friesen adds "will be bullish" for the Gold Price.

Over in Washington, the Federal Open Market Committee – which decides US monetary policy – is due to conclude its two-day policy meeting later today.

"We are becoming increasingly persuaded that QE3 is coming," says Dana Saporta, US economist at Credit Suisse in New York, referring to a possible third round of quantitative easing.

"The best guess is at this meeting they'll try to build some consensus around the idea and lay the groundwork for eventual purchases."

Private sector employment in the US rose by 110,000 people last month – compared to 116,000 in September – according to the ADP Employment Change report, published today by payroll services firm Automatic Data Processing. The ADP report is released each month ahead of the US Bureau of Labor Statistics nonfarm payrolls data.

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