Updated from 1:07 p.m. EST

Gold took a tumble Friday after an especially robust employment report suggested the U.S. economy is healthier than many experts had believed.

Prices for February-dated contracts shed $19.30 to close at $606.90 an ounce on the Comex division of the Nymex. The exchange-traded funds that own bricks of bullion followed suit, with iShares Comex Gold Trust ( IAU) dipping 2.6% and streetTracks Gold Shares ( GLD) lower by 2.5%.

The plunge in gold came after the Labor Department announced that nonfarm payrolls grew by 167,000 during December, smashing consensus forecasts of an increase of 100,000 or so. The figure for November was revised upward to show growth of 154,000 jobs. The unemployment rate held steady at 4.5%, in line with Wall Street forecasts.

"Those expecting the employment market to weaken were wrong," says Michael Darda, chief economist at MKM Partners in Greenwich, Conn. "With the labor market this tight, this is not going to allow the Federal Reserve to cut rates."

Darda expects the market to come around to a no-rate-cut scenario, which would in turn have a positive impact on the strength of the greenback. "That would tend to be bearish for gold," he says.

The U.S. currency was climbing against the euro in response to the favorable economic news. One euro would purchase $1.30, down from $1.308 late Thursday. Still, it was slipping slightly against the yen, buying 118.63 yen, vs. 119.08 previously.

Adding to the warm economic glow was another uptick in the weekly leading index. The Economic Cycle Research Institute says the WLI, which it publishes, rose 3.7% for the period ended Dec. 29, vs. 3.8% for the prior week. Although the rate of growth slowed a hair it still marks the ninth consecutive increase in the indicator. Such statistics auger well for a sustained period of economic expansion.

Further undermining bullion was speculation that Iran's supreme leader Ayatollah Ali Khameini is seriously ill. In the event of his death, the likely new leader, former Iranian President Hashemi Rafsanjani, could possibly lead to a less antagonistic Iran and perhaps a more productive Mideast peace process, Miller Tabak says in market brief. If that happens, tensions could be reduced, reducing the allure of gold as a safe haven investment.

Meanwhile, the miners were hurting. The Amex Gold Bugs Index fell 0.9%, with component stock Harmony Gold ( HMY) leading the pack lower, off 3.6%. Goldcorp ( GG), also part of the index, skidded 2.7%.

Turning to base metals, copper for delivery in March closed down another 6.7 cents at $2.535 a pound on the Comex, with the bullish economic news providing little aid. Cash prices for the metal have fallen from around $4 a pound on the London Metal Exchange in mid-May last year.

"To sustain copper prices above $3 you need a constant stream of bullish news to support such a level," says Neil Buxton, managing director at GFMS Metals Consulting in London. He points to growing inventory levels, a weak U.S. construction sector and China consuming less copper as factors that hurt the bullish case.

He sees an average copper price for the year of around $2.50. He adds that a temporary bounce may occur soon due to the simple fact that prices have dropped so far so quickly.

Shares of diversified miners Rio Tinto ( RTP) and CVRD ( RIO) dropped in line with the metal's meltdown, off 1.7% and 3.4%, respectively.