Gold breached $1,500 an ounce for the first time on Wednesday and is expected to hit $2,000 by the end of next year as a perfect storm of concerns about inflation, debt, the US dollar and unrest in the Middle East pushes up precious metals.

The price of gold – up 27% in the past 12 months and 50% in more than three years – is expected to continue to rise for at least another year to 18 months, as investors carry on shunning risk in favour of so-called safe haven assets.

Gold is not the only precious metal on the up. Silver has hit a 31-year high, after jumping by more than 1% and breaching $44 an ounce. Its price has more than doubled in the past year, with one analyst, Brian Ostroff of Windermere Capital, describing it as "gold on steroids".

However, while experts believe the rise in silver could end soon, many think the gold bull run has some way to go.

Gold has benefited as rising inflation and historically low interest rates mean real interest rates are negative, making saving unattractive, while yields on competing safe haven assets such as US treasury bonds remain very low. Furthermore, escalating concerns about US debt – following the threat by Standard & Poor's this week of a possible downgrade – and, in turn, the outlook for the US economy are pushing down the dollar, in which gold is priced. This means that, in addition to being seen as an increasingly risk-free and effective "store of value", gold's appeal as an alternative currency is also rising.

Fears that unrest in the Middle East could spread and push the price of oil even higher, combined with uncertainty about the pace of the recovery in Japan following the earthquake, tsunami and nuclear power crisis, have increased concerns about the global economy, again favouring the relative safety of gold.

David Jollie, strategic analyst at Mitsui Precious Metals, said: "The three biggest currencies – the US dollar, the euro and the yen – are all from regions with debt issues and we can see the potential for them to come under pressure from inflation and devaluation. Gold will benefit in its capacity as an alternative currency."

Jollie predicts that gold could hit $1,610 by the end of the year and may well continue rising in the first half of 2012. City consultants Capital Economics forecasts the price could breach $2,000 by the end of next year.

"I wouldn't be surprised if we see a hiatus in the next month or two, as the markets take time to digest the recent increases, but the strength will return," said Neil Meander, research director of the GFMS metals consultancy.

Analysts expect the inflationary pressure on gold to reduce in the coming months, since rising energy and other commodity prices are likely to hit demand and bring down their cost. Meanwhile, the Federal Reserve will complete its quantitative easing programme at the end of June, by which time it will have contributed significantly to US inflation by printing about $800bn (£500bn) of new money and spending it on government debt.

However, slowing economic growth and lower inflation mean that interest rates are likely to remain low in the US and other major developed economies, meaning gold should remain relatively attractive, says John Higgins, of Capital Economics. "Furthermore, there are plenty of candidates that could cause a fresh bout of risk aversion, including an escalation of the financial crisis in the eurozone," he added.

Mitsui's Jollie says that a number of factors could put a stop to the seemingly inexorable rise in the price of gold, but regards a rise in US interest rates as the most likely trigger: "Given the current economic situation, it doesn't seem likely that the Federal Reserve can raise interest rates sufficiently quickly within the next 12 months to prevent gold going higher. Beyond that, it becomes more likely and gold may run out of momentum."

An increase in US interest rates would hit gold as it pushed down inflation – reducing the real interest rate – and increased the value of the dollar. The recent surge in the cost of silver – which soared by an astounding 80% last year, increased another 9.3% in January and February – is unlikely to continue. Speculators have piled into the metal, prompting a price increase that is unsustainable, analysts warned.

Like gold, silver can be used for jewellery and as a safe haven, though to a lesser extent than its more expensive metal relative. But it is also widely used in industry, for example in connectors and switches in electronics, increasingly in photovoltaic solar-power cells and, decreasingly, in photographic film, making it more closely linked to industrial output.

"While investment and industrial purchasing have been important in driving the silver price higher, we believe rising prices have driven futures speculation. Although some of the strength in silver prices seems reasonable, it seems increasingly likely that there is some speculative froth in the price," said Jollie.

Jollie believes the silver price is unsustainable in the longer term, but says it's possible the price could first exceed $50 if the speculation continues. The gold/silver ratio, traditionally about 50, has fallen to about 34.0, its lowest level since 1983.??