* Heightened fear of euro zone's debt crisis underpins gold * Spot gold may test record high -technicals * Coming Up: Germany industrial output, July; 1000 GMT (Adds detail, comment; updates prices) By Rujun Shen SINGAPORE, Sept 7 (Reuters) - Spot gold dropped 2 percent abruptly on Wednesday to as low as $1,826, nearly $100 off the all-time high above $1,920 hit in the previous session, tracking heavy losses on U.S. gold futures on technical selling. "It was intra-day technical stops," said a Sydney-based trader. "It doesn't reflect any changes in fundamentals." Spot gold dropped nearly $40, two minutes after U.S. gold tumbled about $50 over three mintues. Cash gold prices since regained some lost ground to $1,836.26 an ounce by 0559 GMT, down 1.5 percent. U.S. gold GCcv1 dived to as low as $1,818.2, and was trading at $1,839.10, down 1.8 percent from the previous close. "Someone dumped a big position with little care, which set off stops and caused the price to cascade even lower," said a Singapore-based trader. Some traders talked about some 4,000 lots of gold being dumped on COMEX. SIGNS OF CAUTION There are signs that investors have become more cautious in joining the gold rush. The Relative Strength Index of spot gold has hovered in the lower 60s so far this month. In August, when gold surged 12 percent on a record-setting rally, the RSI exceeded 70 for 14 out of 23 trading days. A reading above 70 suggests the underlying asset is overbought. Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , remained unchanged from the end of August at 1,232.314 tonnes. In August, the fund posted its largest monthly decline in holdings since January. "Gold tried to test $1,900 twice and couldn't sustain the level, therefore people are cautious this time," said a Hong Kong-based dealer. Volatile prices, and expectations that other central banks may step in to intervene in the currency market, may have also contributed to the restraint, analysts said. Gold's premium over platinum narrowed to just $1 after gold's dramatic decline. Spot platinum fell 0.6 percent to $1,835.50 an ounce. Precious metals prices 0559 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1836.26 -28.15 -1.51 29.36 Spot Silver 41.32 -0.30 -0.72 33.90 Spot Platinum 1835.50 -10.55 -0.57 3.85 Spot Palladium 747.47 1.94 +0.26 -6.51 TOCOM Gold 4564.00 -182.00 -3.83 22.39 147681 TOCOM Platinum 4590.00 -120.00 -2.55 -2.26 14006 TOCOM Silver 102.30 -3.70 -3.49 26.30 804 TOCOM Palladium 1875.00 -38.00 -1.99 -10.59 587 COMEX GOLD DEC1 1839.10 -34.20 -1.83 29.39 44910 COMEX SILVER DEC1 41.43 -0.44 -1.05 33.90 4369 Euro/Dollar 1.4064 Dollar/Yen 77.21 TOCOM prices in yen per gram. Spot prices in $ per ounce. COMEX gold and silver contracts show the most active months

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