Battered Gold Fails to Lift

Countering the bearish effect of the ECB sales was information that South Africa, the world's largest producer of gold, saw production drop by 7.2% in the year to July, according to new government data. Statistics for the three months ending in July saw a seasonally adjusted jump in output of 2.4%.

Lower quantities of mined metal reduces the amount of bullion sold and is generally considered a bullish sign.

Shares of the bullion exchange-traded funds streetTRACKS Gold Shares(GLD) and iShares Comex Gold Trust(IAU) were down 0.2% and 0.3% respectively.

The gold-miner complex took another beating with the Amex Gold Miners Index shedding 1.7%. Shares of Kinross Gold(KGC), were managing to beat the late-day softness with shares gaining 1.1% lately.

Stock in Gold Fields(GFI) was slipping even before the selloff in bullion, as traders reacted to news that the company was buying Barrick Gold's(ABX) 50% stake in the South Deep mine in South Africa. Shares were recently down 2.8%.

Separately, Barrick also announced that it had acquired 52 million shares of Pioneer Metals representing 81% of the float and that it will continue to offer 1 Canadian dollar per share for the remaining 19% through Sept. 22, extending the existing time limit by a week. Shares of Barrick were losing 0.7%, lately.

In the base metals, copper traders were also on the run with the contract for December delivery of the metal retreating 4.5 cents at $3.375 a pound on the Comex, despite modest morning strength.

"We think we could see a little more selling emerge after another day or so of sideways action," notes Edward Meir in a daily market roundup for the commodity broker Man Financial.

Shares of copper giant Phelps Dodge(PD) were losing 0.3%. That leaves the stock down over $10 from last Monday's recent high of $94.78

British-based miners Rio Tinto(RTP) and Anglo American(AAUK) stood out among the complex, each gaining about 1% on the back of a strong British pound.

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