Updated from 11:19 a.m. EDT

Gold resumed its losing streak Thursday, dragged under by weak oil prices and a cooling economy.

The benchmark December contract for bullion closed down $13.70 at $625.30 an ounce on the Comex division of the New York Mercantile Exchange, while oil was shedding $1.89 at $70 a barrel recently, also on the Nymex.

Shares of the exchange-traded funds that hold the yellow metal, iShares Comex Gold Trust ( IAU) and streetTracks Gold Shares ( GLD), were swooning in line with the futures, both down over 2%.

An unexpected 0.1% drop in the Conference Board's index of leading economic indicators vs. an anticipated 0.1% rise added further evidence of a slowing U.S. economy. Waning Mideast tensions also were easing investor anxiety over the possibility of war interrupting oil supplies.

"As confidence grows in the viability of the ceasefire between Israel and Hezbollah it's not surprising that gold and oil have eased off," says Neil Meader, senior metals analyst at GFMS, a U.K.-based specialty consulting house. "Right back to the beginning of July gold has steadily been tracking oil rather than the currencies."

Technical indicators, however, do not appear to be providing much direction to the gold market, which seems to have been trading in a range lately.

"A triangle pattern is forming, and usually when you have a market that's in a triangle pattern, you're going to have a breakout one way or another," says Rich Ishida, president of MarketVane in Pasedena, Calif. Ishida notes that the December contract failed to break resistance at $666.50 earlier in August, which he says is a bearish signal.

Ishida expects the "cycle of higher lows and lower highs" to continue until resistance or support can be broken. The MarketVane sentiment index for gold futures is now 67% bullish compared to figures in the 70s last week.

Despite today's losses the pennant formation still remains in tact, although piercing support at $615 would be even more bearish, he says.

Providing an early bright spot Palladium's initial strength gave way to the general sector rot, closing down $1.85 at $334 an ounce on the Nymex. Palladium miner North American Palladium ( PAL), held on to early gains, up 1.9% recently, but Stillwater Mining ( SWC), another palladium miner, got caught in the downdraft, down 0.6%.

Latin American gold producer Yamana Gold ( AUY) was a big loser, plunging 7.2% recently, after investors reacted badly to the company's proposed takeover of Viceroy Exploration ( XVE), moving up 19%.

The other precious metals producers were suffering also. Among those seeing the most red ink were Gold Fields ( GFI), off 3.7%, Freeport-McMoRan Copper & Gold ( FCX - Get Report) losing 3.2%, Coeur d'Alene Mines ( CDE - Get Report) down 3.8%, and Silver Wheaton ( SLW), 4.8% lower.

The miners ETF Market Vectors Gold Miners ( GDX - Get Report) was shedding 3%.

Elsewhere in metals, Morgan Stanley upgraded diversified miner Anglo American ( AAUK) to overweight from underweight, but it didn't provide any lasting relief for the stock, which was recently trading down 1.4% after a morning rally.

Canadian zinc giant Teck Cominco ( TCK) conceded defeated after its offer to buyer nickel miner Inco ( N) expired midnight Wednesday without result. The announcement opens the door for Brazilian iron ore producer Companhia Vale do Rio Doce ( RIO) to win the bidding war for Inco, which also saw an offer from U.S. copper miner Phelps Dodge ( PD).

Recently Teck was losing 3.6%, Phelps was moving down 3.4%, and Inco was off 0.4%, while CVRD bucked the trend, moving up 0.7%.

Meanwhile, the London Metal Exchange has instituted a maximum $300 a day penalty for sellers of nickel contracts that cannot find the physical metal to fulfill contractual obligations.

"Nickel stocks are at historically low levels and we now have a genuine material shortage," states Simon Heale, CEO of the LME, in a prepared brief.

The move by the LME helped ease the market, which saw prices for the benchmark three-month contract back off $450 a ton to $28,500, off of Wednesday's record highs.