What is going on here?

So Greek is bankrupt. Ok thats a given.

Euro getting smashed as a result thats a given particularly that Portugal, Ireland, Italy, Spain and the UK are not far behind. PIIGSUK indeed.

Germany is getting nervy and some officials believe that Greek should default and started taking defensive positions. Germany May be Ready to Surrender Over Greece.

France are not putting up the barricades and their stockmarket got smashed (-4.03%), particularly the banks on exposure to Greek debt. French Banks Slide as Greek Holdings Might Prompt Moody’s to Cut Ratings

Germany fell 2.27% and Britain 1.63% so they weren't totally spared either. 

And, then the Euro starts to rally on Chinese buying Italian bonds (they must rollover 60B this month) and the US Stocks rally on that rumour. Are the Chinese going to buy Portugese, Irish, Greek and Spanish as well? Short term saving of one "I" still leaves PIGS wallowing.

But why is Gold getting hammered? The penultimate safe haven? 

Goldman Head Gold Trader Speculates About "Authority" Intervention In Gold

Instead of spurring a further gold price rally on the basis that it was one of the few remaining safe haven “currencies” we saw a 50 usd collapse in minutes. The source of this flow seems hard to pin down with some speculating over whether  “authorities” were concerned about the signals of an accelerating gold price and its impact on other fragile markets.

  
And, Central banks and the gold price

Attempts to keep the price of gold down are unlikely to succeed for long. Westerners who buy gold may be unhelpful to the central banks, but you cannot stop a few hundred million Chinese and Indians from protecting their hard-earned savings. And the Chinese are busy developing their bullion markets, taking control away from the Western central banking cartel.