PRECIOUS-Gold recovers after strong dollar drives it to one-week low

* Platinum, palladium hit more than one-week low

(Recasts, adds comment, detail; updates prices; changes dateline) LONDON, Oct 19 (Reuters) - Gold prices recovered on Thursday after dropping overnight to their lowest in more than a week, driven down by a strong dollar, which hurt demand for dollar-priced gold, and by soaring stock markets.

The dollar index fell versus a basket of major

currencies, after gaining in tandem with 10-year U.S. Treasury

yields . They rose on expectations U.S. interest

rates will be soon be raised and on investor risk appetite.

Global stocks, which often trade counter to gold, set record highs before stalling in Europe on concern over political turmoil in Spain, the eurozone's fourth-largest economy.

"There's technical reasons why we've stabilised, (plus) 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 on gold. If gold remains below $1,300, there's a risk of a deeper correction in the coming days or weeks."

Spot gold was up 0.4 percent to $1,286.33 an ounce at

1232 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 for December delivery rose 0.4

percent to $1,288.20. The current term of Federal Reserve Chair Janet Yellen ends in February, and investors 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" "Depending on how the dollar goes, we might look at $1,250-60 as the next stop for gold to trade down. We don't see an immediate upward catalyst for gold except for North Korea," said Richard Xu, a fund manager at China's biggest gold exchange-traded fund, HuaAn Gold. Higher interest rates tend to boost the dollar and push up bond yields, putting pressure on gold by increasing the opportunity cost of holding non-yielding bullion. U.S. interest rates futures saw modest losses on Wednesday after the release of the Fed's Beige Book, but traders still saw an 80 percent chance the Fed will raise rates in December.

"Looks like fundamentally the (U.S.) economy is doing pretty well, so that will also put downward pressure on gold," Xu said.

Silver rose 0.4 percent to $17 an ounce, platinum rose 0.8 percent to $925.20 and palladium climbed

0.2 percent to $954.70. Platinum and palladium hit one-week lows earlier.

Palladium rallied to a 16-year high this week and may

spike further on rising auto sales in China and as consumers replace vehicles damaged by hurricanes in the United States.

(Additional reporting by Apeksha Nair in Bengaluru; Editing by Larry King)