Gold prices surged two percent Thursday after a surprise interest rate cut by the European Central Bank and Greece's prime minister abruptly dropping a widely denounced plan for a referendum on accepting bailout money.

The cut to 1.25 percent from 1.5 percent surprised markets and came as European and other world leaders assemble in Cannes, France for the G20 summit to discuss the sovereign debt crisis in Greece and the Eurozone.

In October, the ECB said it would provide new emergency loans to beleaguered banks to assist them during the ongoing crisis on the continent. The central bank also announced it would help banks by spending some 40 billion euros ($55 billion) to purchase some of their assets.

Still, few analysts expected a rate cut to arrive so soon thereafter.

In Greece, meanwhile, Prime Minister George Papandreou dropped plans to have Greeks vote on whether to accept $180 billion from Europe and the even-greater austerity it would require.

Both developments lifted stocks, with the Europe's main equity indexes up more than two percent. In the U.S., the Dow Jones Industrial Average climbed 1.65 percent, the Nasdaq Composite added 1.85 percent and the S&P 500 was up 1.69 percent.

The euro rose and the dollar was down against a basket of major currencies.

Gold for December delivery jumped $35.50 to $1,765.10 , while cash gold rose $28.80 to $1,763.59

Silver for December delivery was up 56 cents to $34.50, while cash silver added 68 cents to $34.51.