The latest developments in Greece and Italy seem to have temporarily stabilized the financially troubled Eurozone. However, as two of the main actors in this soap opera bow out, two new actors appear. And, while this may help to quell some of the recent political wrangling that we have seen over the last few weeks, the EU debt crisis is still far from being resolved.

Gold prices rebounded on Friday as the US dollar weakened against the euro. The price of spot gold traded as high as $1789 an ounce. Then on Monday gold prices were mildly softer due to a slightly stronger US dollar against the euro. The price of spot gold closed down $ 9.80 an ounce to $1778.80.

The drama in Greece seems to be fading as the location of Eurozone soap opera moves to Italy. On Wednesday, as Papandreou walked off centre stage, Papademos, a former central banker, took his place. Papademos now needs to secure a bailout deal with the Eurozone which demands austerity measures likely to be highly unpopular with Greeks.

Papademos needs the people's support. French President Nicolas Sarkozy and German Chancellor Angela Merkel telephoned him on Saturday — just 24 hours after his cabinet was sworn in — urging him to respect and carry out all Greece's reform commitments in full, the French government said.

He has to win parliamentary approval for the 130 billion ($178 billion) euro bailout, in order to receive Greece's next installment of the EU/International Monetary Fund funding from last year's original rescue package. Athens needs 8 billion euros to avoid defaulting when big debt repayments come due next month and sliding into bankruptcy.

Officials from the troika of the EU, the IMF, and the ECB will start arriving in Athens early this week to speak with the new government.

Papademos has said unemployment, which has hit a record 18.4%, was a major challenge, but he must also deal with Greece’s burgeoning debt which currently stands at more than 300 billion euros which, at 162% of annual output, is almost double the EU average.

With the new austerity measures imposed on Athens, the Greek economy will almost certainly contract substantially; unemployment could easily rise to more than 20%. The crippling effects on tax receipts and demands for social assistance would thrust Greece into a second default, imposing even greater losses on private creditors -- who are likely to get only 25 cents on a euro, if that much, in the end.

In Italy, Prime Minister Silvio Berlusconi formally resigned on Saturday, ending one of the most scandal-plagued eras in recent Italian history amid the jeers of hundreds of protestors gathered in central Rome to celebrate his departure.

Former European Commissioner Mario Monti is the man who will replace Berlusconci and who is expected to form a new administration to face a widening financial crisis which has sent Italy's borrowing costs to unmanageable levels.

The Italian Senate passed a new budget law that cleared the way for a full approval of the fiscal package and the formation of an emergency government to replace that of Prime Minister Silvio Berlusconi.

Italian president Giorgio Napolitano admitted that his country needed an immediate and sustained commitment to the management of our public debt. Analysts warned that the political crisis within Italy risks dragging the country into bankruptcy, as efforts to strengthen its economy are undermined.

The yield on the Italian 10 year bond soared through the sustainable 7% last week after Europe's biggest clearing house raised margin requirement for trading Italian bonds, on the background of political uncertainty in Greece and Italy. Italy, the Eurozone's third largest economy, came close to disaster when the yields on 10-year bonds soared over 7.6%, which was around the same level that forced Ireland, Portugal and Greece to seek an international bailout. The Bank of Italy said it sold EUR 3 billion of five-year bonds on Monday with an average yield at 6.29%, up from 5.32% in October. While the yield was significantly higher and was at a euro era record, demand was solid. Bid-to cover ratio was at 1.47%, up from 1.34 times in prior auctions. With the national debt of Italy which currently stands at 2.6 trillion US dollars, I wonder how Italy is going to be able to finance its debt.

UniCredit Italy’s largest bank reported a 10.4 billion euro loss for the quarter (analysts estimated the bank would earn 7.4 million euros). The bank wrote down 10.2 billion euros' worth of assets. It says 9.8 billion euros of write downs will have no impact on cash. UniCredit also said it won't pay a dividend for 2011, and it's firing 5,200 employees, around 12% of its workforce.

In the meantime, there still seems to be around $600 million missing from client’s accounts with MF Global the company that filed for bankruptcy last week. This goes to show the big does not necessarily mean safe.

The yield on Spanish 10 Year bond yield just passed 6%. The catalyst was the discovery earlier that Spanish bank borrowings from the ECB rose to €76 billion ($104.1 billion) in October, the highest level in more than a year.

Now that Italy has taken centre stage and as it comes perilously close to slipping into insolvency, gold is likely to remain the safe-haven asset of choice. Those individuals who believe that this change in leadership will be the cure for all of the Eurozone’s ills are, in my mind, delusional. Buying into European debt will be financial suicide and anyone who does deserves the same fate as those people who purchased high yielding Greek debt more than a year ago.

Simply because there has been a change of leadership in Greece and Italy, the massive debt of these two countries as well as others in the Eurozone cannot be made to disappear by the wave of a magic wand held by a group of political and financial leaders. While the values of currencies continue to gyrate on a daily basis, the price of gold seems to be consolidating between $1750 per ounce and $1800 per ounce. For the moment certain technical indicators are signaling a neutral direction with an upward bias which suggests that prices will soon break above $1800 per ounce.