Gold Rallies on Jobs News

"The big concern is that the U.S. has lost its leverage against Tehran, and that Israel may have to act on its own if it wants to avoid a nuclear Iran," says Peter Grandich, editor of The Grandich Letter "That will only help fuel the gold price and that's why people are getting their positions now."

From a technical analysis viewpoint, a close above $650 would be "very positive," with the next level of resistance likely at about $668, says Nell Sloane, an analyst at NS Futures in Chicago. But she warns: "We're a little bit overbought, which means the market is a little bit vulnerable."

The rally in gold helped lift the Amex Gold Bugs Index 3.6%. Shares of Yamana Gold(AUY Quote) and Goldcorp(GG Quote) led the pack, rising 6.4% each.

Also doing well were shares of Newmont Mining(NEM Quote) and Barrick Gold(ABX Quote), up 2.6% and 3.9% respectively.

In base metals, March-dated copper contracts gained 4.05 cents at $3.1955 a pound.

"Housing construction will be off a lot, but the commercial construction is still good and that should help copper a bit," says says Peter Morici, an economist at the University of Maryland, who sees a "benign" first half of 2007 for the industrial metals complex with continued robust demand from China, India, and Korea.

Shares of diversified miners BHP(BHP Quote) and Rio Tinto(RTP Quote) moved up about 1% and 1.4%, respectively.