The surface plasmon energy of gold clusters formed by Ar+ ion beam mixing of Au/silica is investigated for the size effect. The redshift with decreasing cluster size is assigned to the 'spillout' effect in small clusters (<5 nm). Core-electron contribution to the metal dielectric function is mainly responsible for the blueshift with decreasing cluster size (quenching of the size effect) in case of bigger cluster size (>5 run), assisted with annealing treatment. The competition between 'spillout' effect and the frequency dependence of interband dielectric function leads to a quasiquenching of the size effects in the optical response. (C) 2003 Elsevier Science B.V. All rights reserved.