A weaker yen versus the dollar usually helps yen-based gold, but a strong dollar has started to overwhelm that effect with the dollar-based spot gold price also falling to a five-week low in New York the previous day.
"Gold is under pressure as the dollar is holding around two-year highs against the yen," said Shoji Sugata, assistant manager at Mitsubishi Corporation Futures.
"But there is still a lot of bargain-hunting interest, which should limit sharp falls from here."
The benchmark October gold contract on the Tokyo Commodity Exchange closed at 1,740 yen per gram, down 17 yen or 0.97 percent from Tuesday's settlement.
The contract's session high was 1,744 yen and the bottom was 1,738 yen the lowest since October 25. Near-term technical sentiment appeared to have deteriorated on Wednesday after the key gold contract fell below its seven-day moving average (MA) of 1,755 yen and its 14-day MA of 1,748 yen.
Spot gold rebounded in Asia as physical demand resurfaced at lower levels and helped the metal reverse heavy losses sparked by fund selling in New York, but it was still not far from a five-week low set the previous day.
Spot gold was trading at $461.10/461.70 an ounce from $459.50/460.25 last quoted in New York.
It had dropped as low as $457.50 on Tuesday.
Fund operators were seen to be keener to lock in profits from commodities ahead of the end of the year.
Recent falls in oil prices also may be reducing inflation concerns, in turn hurting sentiment for gold.
On Tuesday, the key Nymex crude futures contract settled at $59.85, below the closely watched $60 level for the second day in a row.
It had dropped as low as $59.05, the lowest since July 28. Still investors were expected to refrain from selling gold too actively because the yellow metal is considered an attractive alternative when gains in Wall Street stocks are relatively limited and United States Treasuries struggle.
Mitsubishi's Sugata said benchmark TOCOM gold should find solid support at 1,700 yen and spot gold at $450.
TOCOM platinum also dropped to a one-week low as speculators heavily sold to adjust their positions ahead of Culture Day, a public holiday in Japan, on Thursday.
October platinum closed at 3,423 yen per gram, down 34 yen or 0.98 percent from Tuesday's close.
It had moved in a range of 3,421 to 3,447 yen. ]Other contracts closed down 31 to 38 yen.