Spot gold prices breached $1,500 for the first time and silver hit a 31-year high on Wednesday, supported by a weak dollar and concerns over a sovereign debt crisis in the euro zone.

Lofty oil prices, inflation concerns, worries over the euro zone sovereign debt crisis as well as political tensions in places like the Middle East should keep gold strong for the time being, analysts said.

There are not a great deal of reasons to sell it at the moment, apart from concerns that there are a lot of longs in the market and there is a risk of sell-off at some point, said Darren Heathcote, head of trading at Investec Australia.

Spot gold rose to $1,500.16 an ounce before easing slightly to $1,499.10 by 12:13 a.m. ET, up 0.4 percent. U.S. gold futures rose to a record of $1,500.90.

The dollar index <.DXY>, a measure of the greenback against a basket of currencies, softened toward its 16-month low hit last week, boosting the appeal of gold in non-dollar denominated currencies.

Technical analysis also points to a further rally in gold targeting $1,518, according to Reuters market analyst Wang Tao.

Some market watchers see gold consolidating at its current level as it waits for the next reason to push higher.

I don't see prices convincingly past that level in the next few days unless we see something very negative, probably related to the euro zone sovereign debt. But we do see gold very well supported at the $1,490 level, said Natalie Robertson, commodities strategist at ANZ.

Fears over a potential downgrade of the U.S. credit rating eased after U.S. Treasury Secretary Timothy Geithner tried to reassure investors the country's two parties were making progress on reducing the deficit, she added.

SILVER HITS 31-YEAR HIGH

Silver continued to charge ahead, rising to a 31-year high for the fifth consecutive session, as investors continued to favor gold's less expensive cousin.

Spot silver rose to $44.34, a level unseen since 1980, before easing slightly to $44.25, up 0.8 percent.

Analysts and traders expected silver to continue to shine, as investors favor the metal, which benefits both from safe haven demand and growing industrial consumption.

Silver is still in a clear bull trend that targets $50.00 next, said Taso Anastasiou, a UBS technical strategist.

He said the medium-term trendwas bullish, but warned that silver might go through a correction in the near term as the metal has been very overbought.

My key medium-term support level lies at $33.00 and while it is difficult to identify what would cause silver to sell off aggressively, there is an increased chance we will see a correction toward the $35.00 to $33.00 area.

The Relative Strength Index on spot silver rose to above 84, a level unseen since February 2008, indicating a heavily overbought market.

(Editing by Michael Urquhart)

Timothy geithner Gold Silver