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.

earlier related report
Gold ends at record high above $1,500
Hong Kong (AFP) April 20, 2011 - Gold hit a fresh record above $1,500 in Hong Kong on Wednesday as traders sought out the safe haven amid concerns over the global economy.

The precious metal closed at $1,500.00-$1,501.00 an ounce, days after Standard & Poor's downgraded its US sovereign debt outlook to "negative" from "stable".

It had opened at $1,495.80-$1,496.80.

Analysts said that against the background of rising prices, ongoing tensions in the Middle East and North Africa, and eurozone and US debt concerns, the metal could go even higher.

Darren Heathcote, head of trading at Investec in Sydney, told Dow Jones Newswires: "It doesn't take much in this geopolitical and economic environment to push more safe-haven buying, so you have to accept the trend is intact."

The ratings agency's move Monday 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.

S&P said it could not foresee a deal between Democrats and Republicans on cutting the fiscal deficit until after the November 2012 presidential and congressional polls, and that without one, the problem would only worsen.

The budget gap is expected to be almost 11 percent of gross domestic product by the end of the year.

"Because... the path to addressing these (problems) is not clear to us, we have revised our outlook on the long-term rating to negative from stable," S&P said.

The move sent global shares tumbling and it also comes as concerns grow over global inflation, with China and India struggling to control prices and the European Central Bank also being forced to hike rates to ease costs.

Gold is considered a safe haven bet against high inflation.

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