Gold tops $1,500 for first time

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The price of gold topped $1,500 an ounce for the first time on Wednesday as a weakened dollar plus fears over high inflation and countries' debt attracted investors to the safehaven precious metal.

Gold reached $1,502.32 an ounce at 0705 GMT. In later trading on the London Bullion Market, gold dipped back under the landmark barrier to stand at $1,499.32.

Sister metal silver meanwhile reached a 31-year high of $44.48 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 times.

Gold began its surge 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, while it came amid growing concerns over global inflation, with China, India and the eurozone struggling to control prices.

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

Kryuchenkov added: 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 prices have risen by six percent since the start of the year, breaking a series of record highs along the way. They breached $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.

Top EU and IMF officials working on a debt rescue for Portugal worth some 80 billion euros on Tuesday met leading unions and politicians.

The country, which faces a general election on June 5, is eight weeks away from a risk of defaulting on its debt.