Now, will Ireland help gold prices go up? It seems so. When Dubai economic crisis unraveled, gold prices zoomed. When Greece economic tragedy came to the light, gold prices soared.

Now, Moody's Investors Service downgraded Ireland one notch, to Aa2 from Aa1, although it remained comfortably above junk level. Moody's also changed the outlook on the ratings to stable from negative.

The downgrade is primarily driven by the Irish government's gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability.

The Moody's downgrade put its ratings in line with other agencies. Standard & Poor's downgraded Ireland to AA in June 2009, after lowering it to AA+ from AAA in March 2009. Fitch downgraded Ireland to AA+ from AAA in April 2009, then to AA- in November 2009.

Moody's also said that the downgrade had been driven by the increased burden in liability for banks after a series of recapitalization measures led by the state. As a result, yields on the benchmark 10-year Irish bond rose slightly, by 0.04 percentage point.

This move by the consultancy firm is set to help gold prices shoot up. At a time when the entire Europe is mired in economic woes, this new damning assessment by Ireland will definitely help gold prices go up.

In a sense, the near-term pressure is off Dublin. The government does not face any redemptions of benchmark bonds this year and it has raised sufficient money to last until the first quarter of 2011 - regardless of the outcome of coming sales, analysts said.

Recent bond sales by other European governments under pressure, like Spain and Portugal, have been stronger than some analysts had expected, given the size of their national deficits.

Once one of the fastest-growing economies in Europe, Ireland has suffered a drastic turnaround as the removal of easy credit and a crash in home prices hurt consumer confidence.

The economy shrank 7.1 percent last year, causing a steep decline in tax revenue. The ratio of debt to gross domestic product rose to 64 percent by the end of 2009, from 25 percent before the crisis, and was continuing to grow. Moody's predicted it would stabilize at 95 percent to 100 percent over the next two to three years.

Joblessness in the country of 4.5 million is now above 13 percent. In response to the rising deficit, Irish politicians have raised taxes and cut salaries for nurses, professors and other public workers by as much as 20 percent. They have also thrown money into the country's main lenders to prevent bank failures.