* Dollar sags as Treasury yields slip back
* World stocks stumble off all-time highs
* Platinum, palladium hit more than one-week low (Adds comment, updates prices, adds New York dateline)
By Renita D. Young and Maytaal Angel
NEW YORK/LONDON, Oct 19 (Reuters) - Gold prices recovered on Thursday from the more than one-week low they had reached overnight as a rally in both the dollar and equities ran out of steam, but the precious metal remained vulnerable to further declines.
The dollar index .DXY fell against a basket of currencies as 10-year Treasury yields US10YT=RR dropped. FRX/
Gold XAU= was up 0.4 percent at $1,286.31 an ounce by 2:40 p.m. EDT (1840 GMT), after earlier hitting its lowest since Oct. 9 at $1,276.22. Gold has lost 6 percent since Sept. 8.
U.S. gold futures GCcv1 for December delivery settled up $7, or 0.6 percent, at $1,290 per ounce, hitting $1,277.60, its lowest since Oct. 6.
U.S. jobless claims fell 9 percent during the week ended Oct. 14 to 222,000 from 224,000, the U.S. Labor Department said on Thursday. stock markets slipped from a record high on Thursday after a flurry of tepid corporate earnings reports but were off session lows as Wall Street pared losses, while demand for safe-haven assets pushed U.S. Treasury yields lower. MKTS/GLOB
"There's technical reasons why we've stabilized, stocks have come off, (but overall) people are not finding much value investing in gold at the moment," said Fawad Razaqzada, an analyst at FOREX.com.
"The lack of safe-haven demand combined with expectations of higher interest rates is weighing. If gold remains below $1,300, there's a risk of a deeper correction in the coming days or weeks."
Federal Reserve Chair Janet Yellen's current term ends in February, and investors are waiting to see who U.S. President Donald Trump will pick as her replacement. The White House said a decision would be announced in coming days. interest rates typically boost the dollar and bond yields, pressuring gold by increasing the opportunity cost of holding non-yielding bullion.
"Fundamentally, the U.S. economy is still doing well, but the worry is that there is not much inflation in the system," said Ryan McKay, commodity strategist at TD Securities in Toronto.
"Without the inflation, the market is expecting that the Fed won't raise rates three times in 2018, as the documents are suggesting, and that would make it more bullish for gold."
Canada's Bank of Nova Scotia BNS.TO is exploring options for its gold business ScotiaMocatta, including a possible sale of the world's oldest gold trader, three sources familiar with the matter said on Wednesday. XAG= rose 1.24 percent at $17.19 an ounce, platinum XPT= rose 0.4 percent at $921.80 and palladium XPD= was up 0.4 percent at $956 per ounce.
Platinum and palladium hit one-week lows overnight.