Buying interest in Asia, especially from China, helped offset some of the selling pressure, dragging spot gold back from a 1-percent loss earlier in the day, traders and analysts said.

Asian stocks bounced on August 15 following Wall Street gains, with Japan's Nikkei rising up 1.4 percent.

Spot gold traded down 0.4 percent to US$1,738.46 an ounce while US gold lost 0.1 percent to US$1,740.40.

The sharp decline in global spot prices opened up an arbitrage window for Chinese market participants. The gold forward contract on the Shanghai Gold Exchange stood at 358.70 yuan a gram, or US$1,745.79 an ounce.

The most-active Shanghai gold was traded at 360.24 yuan a gram, equivalent to US$1,753.28 an ounce.

The fall in gold-backed exchange-traded funds added to gold bulls' concern. Holdings of the SPDR Gold Trust, the world's largest gold ETF, dropped 1 percent on the day to 1,260.173 tonnes by August 12, the lowest in a week and half.

In addition, data showed that speculators scaled back their bullish bets in US gold futures and options last week, even as gold hit a record high of US$1,813.79 on August 11.

But technical analysis suggested that gold could rebound to US$1,768 an ounce in the next 24 hours.