Gauff hit a whopping 54 unforced errors and served 14 double faults en route to a 6-1 6-7 (3-7) 6-0 loss to Spain's Jessica Bouzas Maneiro at Perth's RAC Arena on Monday.
Taylor Fritz came to the rescue for the US in the men's singles rubber, producing an epic 7-6 (7-4) 3-6 7-6 (8-6) triumph over world No.38 Jaume Munar in a match lasting three hours and 13 minutes.
In a titanic battle, Fritz blew two match points on Munar's serve while leading 6-5 in the third set.
Munar had a match point in the tiebreak, but Fritz pulled out a huge serve to save himself, before holding his nerve down the stretch to seal the win.
It meant the tie would come down to the mixed doubles, and Gauff teamed up with Christian Harrison to produce a 7-6 (7-5) 6-0 win over Yvonne Cavalle Reimers and Inigo Cervantes.
"I was happy to get back out there on court and get a point for my team today," Gauff said.
"Obviously it (my singles loss) wasn't a great match for me.
"Once it was over, I just sat in the bathroom for a little bit, and had a lot of confidence in Taylor, so I was just trying to make sure that I was ready for the mixed.
"That's the beauty of this event, that you have other people who can pick you up on your off days."
Fritz has been battling knee tendinitis since last year, and has already conceded it will be an injury he'll have to manage at the Australian Open.
"Injury wise, today was really positive for me," Fritz said.
"I started feeling my knee towards the end of the first set. But in the past, when I've started feeling it, it gets worse and worse and worse from that point on.
"(Today), I felt like my pain level stayed kind of at that starting point, so I was able to continue playing the whole match and it never really became to an issue."
On Saturday, Gauff swept to a 6-1 6-1 win over Solana Sierra to help propel the defending champion US to victory in their tie against Argentina.
But in 30-degree heat in Perth on Monday, major alarm bells were ringing for Gauff when she lost the first set and went down 1-4 in the second.
By that stage she had hit just four winners, but Gauff launched a huge fightback to take the second set in a tiebreak.
With her tail up, Gauff was expected to go on with the job in the third set.
But world No.42 Bouzas Maneiro had other ideas, using a bathroom stop to regain composure before breaking Gauff three times to wrap up the third set in 38 minutes.
"You see she won the second set, and I went to the bathroom and I was trying to focus, just stay point by point. That was my mentality in the third set," Bouzas Meneiro said.
Switzerland became the first team to secure their spot in the quarter-finals after posting a 2-1 win over Italy in Sydney on Sunday night.
On Monday in Sydney, Czechia secured a 3-0 tie win over Norway after Jakub Mensik downed fellow top 20 star Casper Ruud 7-5 7-6 (8-6) following on from dual grand slam winner Barbora Krejcikova's 6-4 6-3 victory against Malene Helgo.
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