After the Greece economic tragedy, its is the turn of Hungary to help gold prices go up.

Following the failure of talks between Hungary government, IMF and the European Commission, the crisis in the European zone deepened and this has helped gold prices to go up.

The IMF and the EU gave Hungary multibillion-dollar loans in late 2008 to help it recover from the financial crisis. The international lenders are now re-negotiating with the government.

The breakdown in talks means that Hungary will not have access to remaining funds of about 5.5 billion euros (US$7.1 billion) in its 20 billion euro financing deal until the review is completed.

Hungary's new centre-right government insisted on a new financial sector tax this year and ruled out further austerity measures at talks with the IMF and EC.

With the crisis is still unresolved, gold prices are set to soar as fear of an economic crisis in the EU will help the yellow metal buying as a safe haven.

The safe haven demand during the Greece crisis had helped gold prices to soar beyond $1,200 per ounce and various research agencies had predicted that the gold prices will cross $1,300 per ounce in 2010.

The IMF and EU have voiced concerns over a 200 billion forint tax planned by the Hungarian government to contain the budget deficit and a bill which would cut the central bank governor's salary.

But, Economy Minister Gyorgy Matolcsy said further austerity packages are out of the question. The IMF said on Hungary will need to take additional measures to meet its deficit targets this year and in 2011.

In a separate statement, the EC said reducing Hungary's deficit by next year will require tough decisions, notably on spending.

Hungary has set a budget deficit target of 3.8% of GDP for 2010 and below 3% of GDP in 2011.

The IMF said Hungary continues to face fiscal challenges and should present sustainable and structural means of reducing its budget deficit.

The euro has also slipped off two-month highs as a downgrade of Irish government bonds reminds investors of the eurozone debt crisis.

The 16-nation currency bought $1.2925 in Monday morning European trading, down from $1.2947 in New York late Friday.

The euro has been weakened this year by concerns over Europe's debt crisis and its implications for growth and banks.