Updated from 12:36 p.m EDT

Copper prices surged Thursday on the expectation that a major mining strike in Chile soon would be over.

Meanwhile, an $8.6 billion merger between gold miners and gains in gold prices were giving a lift to gold stocks.

Workers at Chile's massive Escondida mine, who walked off the job on Aug. 7, were set to vote Thursday on a wage package that could get the miners back to work as soon as Friday. The mine, which is majority owned by


(BHP) - Get Report

, is currently producing copper ore at about 50% of normal levels.

The Escondida mine is estimated to churn out 8% of the world's copper.

In theory, the potential for increased production should lead to a decline in copper prices. But industry experts attributed the rise in copper to a combination of thin trading and short-covering by speculators who had sold short in anticipation of a settlement and were now closing out their positions.

A short sale is a bet that a commodity or stock will fall in price.

Contracts for December delivery of copper jumped 3% to close at $3.45 a pound, a gain of 10.35 cents on the Comex division of the New York Mercantile Exchange.

"It really was a case of sell the rumor and buy the news," says Mo Ahmadzadeh, president of Mitsui Bussan Commodities, a New York trading company.

Ahmadzadeh says copper demand should remain strong despite the slowdown in the housing market. He expects China to stop drawing down its strategic reserves and resume buying scrap copper in the open market.

The copper rally translated into gains for stockholders, with shares of copper miners

Phelps Dodge

( PD) and

Southern Copper

( PCU) both rising, up 1.7% and 1.9% respectively.

In the precious-metals market, gold was staging a minor rally ahead of a United Nations deadline demanding that Iran cease its enrichment of uranium.

Investors were clearly pricing in a full rejection by Iran's leader, Mahmoud Ahmadinejad, with prices for Comex December gold contracts closing up $8.10 at $634 an ounce.

Gold is seen as a safe-haven asset and is often bought as a hedge against geopolitical uncertainty, as well as a hedge against inflation.

The gold stocks gaining more than most were

Meridian Gold

( MDG), shooting up 8.1%,

Agnico-Eagle Mines

(AEM) - Get Report

, jumping 6.9%, and

Bema Gold

( BGO) rising 5.2%.

Continuing the pattern of mining industry consolidation, Canadian digger



offered to buy Nevada's

Glamis Gold

(GLG) - Get Report

for $8.6 billion in stock.

Glamis was rallying 19.8%, while Goldcorp was retreating, down 8.7% recently.

In other precious metals news, October platinum futures were rallying, closing up 80 cents at $1,252 an ounce on the Nymex. Palladium was gaining too, with December contracts closing at $350 an ounce, $1.30 higher.