NEW YORK, Sept 28 (Reuters) - The U.S. dollar and the British pound fell against the euro on Tuesday as speculation rose those countries' central banks would provide more stimulus to their economies, which sent gold to record highs.
The euro surged to a five-month high against the greenback and to a four-month high against the pound on expectations the Federal Reserve and the Bank of England were likely to pump more money into their anemic economies, a process known as quantitative easing.
Gold futures rose to $1,310 an ounce and silver hit a 30-year high as a weaker-than-forecast U.S. consumer confidence reading and a report that U.S. home prices dipped in July boosted the precious metals' safe-haven appeal.
European stocks fell after the early U.S. data showing weakness while Wall Street closed higher as investors rushed to buy up stocks with strong performance and positive outlooks to avoid missing out on the 9 percent rally in September, typically the year's worst month for stocks.
"For lack of a better term, it really is a 'classic QE day,'" said Tom Fitzpatrick, chief technical strategist at Citigroup in New York. "Bonds rally, equities rally, the dollar goes down and gold hits new highs. At this point, that is what's driving the markets."
The Fed is likely preparing a fresh round of quantitative easing measures to announce at the end of its Nov. 2-3 meeting, hedge fund adviser Medley Global Advisors said in a report on Tuesday, a market source told Reuters.
The Fed is also weighing a more open-ended, smaller-scale bond buying program, the Wall Street Journal reported.
The Bank of England's Adam Posen became the first of the central bank's policymakers since November to urge more credit easing for Britain in order to avoid the kind of slump Japan experienced in the 1990s.
"The growing realization that ultra loose monetary policies may debase currencies is leading to continuing safe-haven demand for gold," analysts at GoldCore said in a note.
The weak U.S. dollar and low bond yields reflect falling investor confidence in the strength of the recovery, analysts said.
Gold for December delivery GCZO reached an all-time high of $1,311.80 an ounce before slipping back to settle at $1,308.30, a rise of $9.70. Silver XAG= rose to $21.65, a three-decade high on the spot market after the U.S. data.
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