LONDON (AFP) – The price of gold topped $1,500 for the first time on Wednesday as a weaker dollar plus fears over high inflation and debt attracted investors into the traditional safe-haven precious metal.

Gold reached $1,505.65 an ounce at 0945 GMT on the London Bullion Market. It later traded at $1,503.60.

Silver meanwhile hit a fresh 31-year high of $44.79 an ounce.

"Gold remains comfortably underpinned with short-term inflation pressures and economic woes triggering some fresh safe-haven inflows," said Andrey Kryuchenkov, commodities analyst at Russian financial group VTB Capital.

The metal is seen as a safe store of value in troubled economic and political times.

The dollar meanwhile fell against the euro, with the US unit troubled by concerns over Washington's ability to tackle its high debt in the world's biggest economy.

Gold began its run towards $1,500 on Monday after ratings agency Standard & Poor's revised its outlook on US sovereign debt to "negative" from "stable."

S&P's move challenged Washington's gold-star "AAA"-rated standard as it warned that politicians seemed unable to agree a plan to reduce a huge budget deficit, which is running at around 10 percent of gross domestic product.

The downgrade had also sent global share prices tumbling on Monday, coming amid growing concerns over global inflation, with China, India and the eurozone struggling to control prices.

Metals consultancy GFMS last week forecast that gold price would soar past $1,600 this year, driven primarily by fears over high inflation.

Kryuchenkov said that gold "shot up after S&P downgraded the US sovereign debt outlook to negative. The move came on top of existing economic woes over resurfacing debt troubles in the eurozone."

Gold has risen six percent since the start of the year, breaking a series of record highs along the way. It topped $1,000 for the first time in March, 2008.

"Gold will remain well bid as long as the ongoing debt and inflation worries persist," Ian O'Sullivan, Spread Co trading group analyst told AFP.

Creative Commons image via flickr user covilha.