Price for gold bullion on the wholesale market rose to $1,730 an ounce this morning in London, after drifting lower overnight, as the euro jumped half-a-cent against the dollar following a report that the German government is considering a plan to speed up the payment of bailout money to Greece.
"There had been a decoupling in the relationship between gold and the dollar in terms of the daily trading range, and now we are seeing a readjustment," says LGT Capital Management analyst Bayram Dincer.
German tabloid Bild reports that the German government is proposing to bundle the next three tranches of Greece's bailout into one payment of around €44 billion, citing government sources. Greece has to meet a €5 billion debt repayment this week.
Earlier in the day, stock markets and the euro fell to two-month lows after a public disagreement between policymakers over Greece and news that Greece's next bailout tranche, worth €31.3 billion, will be delayed for another week.
Greece's deadline reducing its debt-to-GDP ratio to 120% will be extended from 2020 to 2022, Jean-Claude Juncker, chairman of the eurogroup of single currency finance ministers, told reporters.
"In our view, the appropriate timetable is 120% by 2020," countered International Monetary Fund chief Christine Lagarde.
"We clearly have different views [on whether to give Greece more time]," she added.
Lagarde "appeared exasperated" with Juncker at the press conference, the Financial Times reports.
The FT adds that the IMF has for months argued that there should be a further write down of Greek debt, in addition to the restructuring deal back in February that saw losses imposed on private sector creditors.
In order for Greece to reduce its debt to 120% by 2020, "a much more drastic debt stock reduction (possibly north of €80 billion in total) will be required," says Goldman Sachs senior economist Themistoklis Fiotakis.
"This seems politically infeasible at present. We think a more likely outcome will involve some debt relief, continued official sector funding...and a continued uncertain Greek debt profile [which will] hold back a Greek recovery relative to a more decisive write-off."
Silver bullion meantime climbed to $32.67 an ounce, in line with where it started the week, while other industrial commodities ticked lower and US Treasury bond prices gained.
"The fiscal cliff is being priced in because it's the biggest risk facing the market right now," says Priya Misra, head of US rates strategy at Bank of America Merrill Lynch in New York, referring to the combination of tax rises and spending cuts due at the start of next year unless US lawmakers agree a deal to avoid them.
Here in the UK, inflation rose to its highest level since May last month at 2.7%, official consumer price index data published Tuesday show.
"The largest upward pressure came from university tuition fees, followed by food and housing," the Office for National Statistics said.