The smart stayer, owned by Dr Marwan Koukash, ran disappointingly in the Melbourne Cup, and was found to have bled.
Magic Circle was fancied to run a big race in the Australian showpiece after enjoying a successful spring at home, with victories in the Chester Cup and the Henry II Stakes.
"He will come home on Thursday. Obviously it was terribly disappointing what happened on the day," said the Worcestershire handler.
"He had a great preparation, the rain arrived - and we were very happy. Everything was in our favour, but the horse bled - which was not ideal and it affected his performance quite badly.
"He is not broken beyond repair. We will get him home, and he will have the winter off, and we will see what we will do next spring.
"He had an entry in Hong Kong, but they don't want to have a horse that bled last time racing - so those plans were shelved."
Chester is again the probable first port of call of Magic Circle in 2019 - but his target is unlikely to be the Chester Cup.
"He will be back almost certainly at Chester in May, and we will move forward from there," said Williams.
"He won't run in the Chester Cup - he will probably run in the Huxley (Stakes), and that will be his starting point for next year.
"I don't see why he won't be a Cup horse next year. We will give him a shot next season, and he is young enough to be a force in those Cup races."
