(Reuters) - Gold rallied to a second consecutive record high on Wednesday, powered by a slide in the dollar and by investor demand for safe-haven assets, while silver hit fresh 31-year peaks. Unrest across the Arab world and unease over the euro zone's debt finances encouraged inflows of cash into gold, which has risen by more than 2 percent this week. This has more than offset the potentially damaging impact of China's latest increase in interest rates and a less pessimistic take on the U.S. economy from the Federal Reserve. The focus this week is on Thursday's three central bank policy meetings, at which the European Central Bank is almost guaranteed to raise rates, thereby boosting the euro against the dollar, while the Bank of Japan and the Bank of England are expected to hold their fire. Spot gold was last up 0.6 percent at $1,459.40 an ounce by 1041 GMT, having hit an all-time high of $1,460.40 earlier. Gold has rallied by more than 5 percent in the past three weeks. COMEX June gold futures were last up 0.6 percent at $1,461.20, having touched a contract high of $1,461.70. "Six months from here, we think (the strength) is sustainable for both gold and silver, but I wouldn't be surprised if we see a short-term pullback because a lot of this is driven by the euro, which is pretty strong against the dollar," said Standard Bank analyst Walter de Wet. The dollar fell to 14-month lows against the euro, which has been buoyed by signals from policymakers that the ECB will raise rates on Thursday for the first time since July 2008 in spite of the debt crisis in the bloc's weaker economies. NO CHANGE FROM THE FED The minutes from the U.S. Federal Reserve's most recent meeting, released on Tuesday, did not contain anything to suggest the central bank would end its $600 billion bond buying programme ahead of time. "With gold close to its highs, there could be some reluctance to buy at these elevated levels, especially given the uncertainty surrounding U.S. monetary policy and the expected ECB rate hike tomorrow," said UBS strategist Edel Tully. "While a move to monetary policy tightening is not necessarily gold-positive, the inflation risks spurring the euro zone tightening are supportive of gold," she said. Record-high food prices and oil prices at 2-1/2 year highs have stoked inflationary pressures around the world, adding to the case for owning gold, which can help mitigate the impact of rising price pressures on an investment portfolio. The world's central banks are tackling inflation by tightening monetary policy -- a potential negative to gold, which bears no yield.

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