Gold rose on Thursday, rebounding sharply from a nine-month low touched earlier in the session, as a sharp sell-off in U.S. equities prompted investors to buy bullion as a safe haven.

Analysts said gold prices still look vulnerable, however, because of a strong dollar and expectations of higher U.S. interest rates.

U.S. stocks were sharply lower moving into late trading, weighed down by a drop in Apple shares, as each of the major indexes fell more than one per cent and the S&P broke below a key support level.

"This is just an initial reaction to the hard sell-off of the equities market right now. I still think gold will fall below $1,200 on expectations of higher U.S. interest rates soon," said Phillip Streible, senior commodities broker at RJO Futures in Chicago.

Spot gold was up 0.4 per cent at $1,222 an ounce, having earlier hit a low of $1,206.85 an ounce, its weakest since Jan. 2.

U.S. COMEX gold futures for December delivery settled down $2.40 an ounce at $1,221.90, with trading volume about 40 per cent above its 30-day average, preliminary Reuters data shows.

Physical demand has been subdued this year after a record 2013, when prices slumped by 28 per cent. Buying of physical gold in top market China was light on Wednesday, traders said.

China's net gold imports from main conduit Hong Kong rose in August from a three-year low in July, data showed on Thursday.

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