* Dollar index hits over 9-week high
* Equities under pressure after 5 days in red
* Palladium hovers near all-time high hit on Tuesday (Recasts, updates prices, adds comments)
By Swati Verma
BENGALURU, Oct 24 (Reuters) - Gold eased on Wednesday as the dollar firmed and speculators locked in profits from a more than three-month peak hit in the previous session.
Losses were modest, however, as gold got support from investors looking for insurance from potential further downside in stock markets after five days in the red.
Spot gold was down 0.2 percent at $1,228.06 an ounce at 1257 GMT. U.S. gold futures were down 0.4 percent at $1,231.50 an ounce.
On Tuesday, the precious metal touched its highest since July 17 at $1,239.68 as investors took cover from a stock selloff.
The dollar index versus a basket of currencies rebounded 0.4 percent and hit its highest since Aug. 17 at 96.53.
“The most important reason is a little bit of a rebound in the U.S. dollar, which has a negative effect on gold,” Julius Baer analyst Carsten Menke said. “On top of that, following a strong performance we had in gold in the past few days, this may be a little bit of profit taking, although this should not be the end of the recovery in gold.”
Gold prices have gained more than 6 percent after falling to $1,159.96 an ounce in mid-August, their lowest since January last year.
“After reaching a three-month high yesterday, gold is taking a breath... (but) the environment remains positive for bullion, with growing investor interest for the precious metal (among those) betting on further corrections of stock markets increases,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.
World stocks steadied after falling for five straight days, pressured by earnings disappointment, concerns over Italy’s budget and worries that world economic growth is losing steam.
“Gold is focusing on the risk aversion creeping into the market, especially reflected in the weakness seen in global stock markets,” said Saxo Bank analyst Ole Hansen.
Dollar-denominated gold is often used as an alternative investment during times of political and financial uncertainty.
“If there is a correction, then $1,210 is a good support zone; breaching this support may lead gold to fall further towards $1,195, which is less likely in the current scenario,” said Vandana Bharti, assistant vice president of commodity research at SMC Comtrade Ltd.
Palladium fell 1 percent to $1,129.20 per ounce after hitting an all-time high of $1,150.50 in the previous session, boosted by tight supplies, large deficits and fresh interest from speculative investors.
“As long as it stays above $1,100, I wouldn’t be surprised if some additional momentum comes and takes it higher as liquidity is not great,” Saxo Bank’s Hansen said.
Silver was down 0.5 percent at $14.66 an ounce, while platinum slid 0.9 percent to $823 an ounce. (Reporting by Swati Verma, Eileen Soreng and Arpan Varghese in Bengaluru; Editing by Jan Harvey and David Stamp)