Gold rebounded on Thursday to a near five-month peak as the dollar declined amid expectations of a slowdown in the pace of US interest rate hikes, with investors seeking refuge in the bullion from a sell-off in global stocks.

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Spot gold rose 0.26 percent to $1,240.72 per ounce at 12:36 p.m. EST (1736 GMT), having earlier reached $1,244.32 per ounce, its highest since July 17. US gold futures were 0.28 percent higher at $1,246.10 per ounce.

"What we are seeing is a lot of safe-haven support with the equity markets selling off, coupled with a weakness in the US dollar," said Alex Turro, market strategist at RJO Futures.

"Jobless claims came weaker than expected and ADP numbers missed. That leads us to the fact that the US Federal Reserve may be coming off the hawkish tone they had and this ultimately is just going to provide more underlined support for gold."

Traders' attention is now turning to Friday's non-farm payrolls report, which is also likely to be on the US central bank's radar.

The dollar fell about 0.5 percent as US Treasury yields tumbled and traders scaled back expectations on the number of hikes the Fed would implement amid weakening economic data and market volatility.

"The weaker dollar is keeping gold positive at the moment. If you look at the other markets as well, there is a kind of risk-off situation going on," said Phil Streible, senior commodities strategist at RJO Futures in Chicago.

Global stock markets slumped for a third straight session on Thursday as the arrest in Canada of a top executive of China tech giant Huawei for extradition to the United States raised fears of a flare-up in trade tensions. US stocks tumbled 3 percent.

Meanwhile, palladium dropped after outshining the yellow metal for the first time since 2002 on Wednesday.

Spot palladium slid 4.28 percent to $1,190.30 per ounce after rising to an all-time high of $1,263.56 in the previous session.

"It's just profit-taking. Lots of money has moved in there so investors are checking out and taking some profits," said Rob Lutts, chief investment officer at Cabot Wealth Management.

Silver dipped 0.37 percent to $14.45 per ounce, while platinum extended losses to a third session in a row, declining 1.86 percent to $785.49 per ounce. The precious metal earlier hit a low of $779.50, its lowest since Sept. 12.