Spot gold was down 0.7% at $1,857.70 per ounce by 1216 GMT, having earlier fallen as low as $1,851.31. On Tuesday it hit its highest since Nov. 23 at $1,875.07.
U.S. gold futures slipped 0.8% to $1,859.40.
"The higher risk appetite seems to be gaining the upper hand again, and coupled with the vaccine news, it seems to be weighing on gold prices," said Commerzbank analyst Daniel Briesemann.
While a fresh attempt in the United States to agree on a new fiscal support package supported gold on Tuesday as a hedge against potential inflation, on Wednesday the news acted chiefly as an additional trigger for risk sentiment.
Global equities reached record highs on Wednesday, with the healthcare sector benefiting from positive coronavirus vaccine news.
After Britain on Tuesday became the first Western nation to start a mass vaccination drive, Pfizer and Johnson & Johnson made further progress with trials and regulatory approvals respectively.
On the stimulus front, U.S. President Donald Trump's administration proposed a $916 billion aid package. Congressional lawmakers were still working on resolving differences on the inclusion of business liability protections and state and local government aid.
Investors are also looking forward to the U.S. Federal Reserve's two-day policy meeting next week for clues on the direction of monetary policy.
"A dovish FOMC, particularly in the scenario where they look to cap rates in the longer end of the U.S. yield curve, should relight the gold rally," said Jeffrey Halley, a senior market analyst at OANDA.
Silver slipped 1.6% to $24.17, while platinum fell 0.6% to $1,016.21 and palladium was down 0.2% to $2,305.71.
(Reporting by Asha Sistla and Nakul Iyer in Bengaluru; Editing by Louise Heavens and Jan Harvey)
By Asha Sistla
