Spot gold fell as low as $1,581.30 an ounce, down 1.4 percent. Having broken strong technical support at $1,600, the metal is now vulnerable to further losses, with the next downside target at $1,564, traders said.
U.S. gold futures were last down 1.3 percent at $1,584 per ounce. Euro-denominated gold fell as low as 1,189.86 euros an ounce.
"There is less money finding its way into the gold market," Tobias Merath, global head of commodity research at Credit Suisse, said.
"Fundamentals for gold haven't really changed, but other asset classes have now become more attractive, and that's leaving prices largely range-bound."
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Over the past few years, gold has become more dependent on investment flows, which now account for one third of global demand compared with just 10 percent a decade ago.
"The problem with this market structure is that prices (have) become a bit more dependent on investment sentiment, and if investors stop buying, prices fail to rally," Merath said.
Holdings of the SPDR Gold Trust, the world's top gold-backed exchange-traded fund, dropped by more than 3 tonnes from the previous session to 1,319.964 tons on Feb. 19, the lowest level in nearly five months.
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European shares were mixed on Wednesday, consolidating after the previous session's sharp gains on weak earnings and caution ahead of the Fed minute. Earlier Asian shares reached multi-month highs as an improving global economic outlook whetted investor appetite for risk.
The S&P 500 index and Dow Jones Industrial Average hit their highest level in more than five years in the previous session. The S&P 500 has climbed more than 7 percent so far this year, compared with a 4 percent loss in spot gold.
The euro was firm against the dollar, still supported by Tuesday's data showing a strong improvement in German economic sentiment.