Spot gold rebounded in Singapore overnight on Wednesday from its worst day in 18 months, while bullion's safe-haven appeal seemed to be waning for now with investors returning to riskier assets on hopes of more stimulus for the U.S. economy.
Spot gold gained 0.7 percent to $1,842.45 an ounce by 0011 GMT, rebounding from a 3.6-percent tumble in the previous session, its sharpest one-day drop since February 2010.
U.S. gold dropped 0.8 percent to $1,845.90.
The speculation that the U.S. Federal Reserve may signal more stimulus at Friday's Jackson Hole meeting boosted risk appetite, sending Wall Street up 3 percent and snapping a six-session winning streak in gold.
Some gold bulls said it is time to take money off the table after the safe-haven rally extended too far too fast in recent weeks.
Holdings in the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust , dropped nearly 2 percent on the day to 1,259.569 tonnes. While iShares Silver Trust reported a 1.4-percent jump in its holdings.
The sharp drop from a record above $1,911 could trigger buying interest in Asian investors, who have been avid buyers along the rapid rally which pushed gold prices up about $400 since the beginning of July.
Moody's Investors Service cut its rating on Japan's government debt by one notch to Aa3 on Wednesday, blaming large budget deficits and a buildup of debt since the 2009 global recession.