"The U.S. dollar's weakness remains the focal point," said Peter Spina, an analyst at GoldSeek.com, in e-mailed comments. "Gold will push up against the $700 resistance and either see another rally fizzle or see a large wave of momentum kick in and take this market much higher."

Still, Spina said the outlook is unclear. "I am unable to foresee which route we are headed as the bears and bulls struggle to get the upper hand."

For now, "the market remains firm on pullbacks, so the inevitable break of $700 is just a question of when," he said.

Gold for June delivery gained $5.30 to close at $689.70 an ounce on the New York Mercantile Exchange, its highest closing level since April 23. On Thursday, gold futures gained $9.30, the benchmark contract is up $7.90, or 1.2%, for the week.

"Look for continued strength as the day wears on, but keep a keen eye on next week as all market participants will be back in full force and as the Fed watching gets under way," said Jon Nadler, analyst at Kitco Bullion Dealers. The Federal Reserve will meet Wednesday.

"A test, if it comes, of the $695 area [for gold] may succeed this time around," said Nadler, in e-mailed commentary.

Neal Ryan, director of economic research at Blanchard, pointed out that "investment demand is still increasing in each successive quarter while producers are ramping up de-hedging and mine supply is continuing to slump."

So "while we haven't yet achieved the $700 level, each pull back we've experienced in the last two months has created a higher floor price," he said in e-mailed comments. "Now it's time to make the higher highs."
Dollar move

The dollar's weakness contributed to gold's latest rise. The greenback edged lower after the Labor Department said that non-farm payrolls expanded by 88,000 in April, less than the 100,000 expected by economists surveyed by MarketWatch.

The euro was last up 0.4%, while the dollar was down 0.3% vs. the yen.

"Earlier speculation that U.S. jobs growth may reveal the weakest number in some 24 months, became a stark reality," said Nadler. "This news further undercut the dollar and extended expectations that next week's Fed meeting will result in (at least) a continuation of the thus far neutral stance on dollar rates that it had to adopt due to the conundrum posed by rising inflation and sluggish growth (in certain sectors of the economy)."

So "gold once more became a bet to the long side for funds (if not quite yet for the individual investor who may seek a validation of above $695 to join the party)," he said. "Spot bullion rose by $4.50 as soon as the news hit the wires."

Platinum and palladium moved higher along with gold. July platinum rose 1.4%, or $18, to close at $1,328.80 an ounce – up 2.8% for the week. June palladium added 50 cents to end at $377 an ounce, up 0.7% for the week.
Silver, copper focus

Silver and copper also strengthened, with copper posting another sizable gain for the week.

July copper tapped a contract high, rising 0.9%, or 3.2 cents, to close at $3.7585 a pound after a high of $3.804. It climbed 6.5% from last Friday's closing level.

July silver added 2 cents to finish at $13.53 an ounce after a one-week high of $13.70. But it was down 0.3% for the week.

Metals traders have been eyeing developments in Peru where some labor unions have been on strike since the start of the week.

Peru's National Federation of Mining, Metallurgy and Steel Workers and the government have reached a preliminary agreement to end the national-mining sector strike, the secretary general of the federal said Friday, according to Dow Jones Newswires.

Also, Peru's government has declared illegal a strike by unionized workers at Compania de Minas Buenaventura SAA's Uchucchacua silver mine, according to Dow Jones.

But unionized workers at Minera Yanococha SRL said Friday that talks have broken off with the company for a new collective agreement, and they plan to go on strike, the news agency said.

"Peru is currently the world's No. 3 copper and zinc producer, No. 5 in gold, and a top-two silver producer," according to Charles Supapodok, a fund manager for the Artemis Silver Fund, a silver-focused fund that was launched in March of this year.

"None of Peru's major mining companies have declared force majeure, the legal protection invoked when unforeseen events hinder a company's ability to carry out normal operations," he said. And "most mines and smelters hold enough inventory stocks to cover several days of lost production."

But "the strike has had an immediate impact on zinc, lead, and copper prices as these markets are experiencing extremely tight supply conditions with historically low LME [London Metal Exchange] stock levels," he said. "Since the strike's inception on April 28, zinc prices have shot up 7.9%, copper prices climbed 3.5%, and lead prices rose 4.4%."

The strike has affected output from Peru's largest producer of precious metals, Compania de Minas Buenaventura, where unionized workers walked out on the company's Uchucchacua silver mine, Supapodok said.

"In 2005 total world mine silver production was 641.6 million ounces; output from the Uchucchacua mine is approximately 8 million ounces per year, or a little over 1% of total world production," he said.

Given the tight supplies, traders may be best served to keep an eye on copper and silver.
Supplies and indexes

On the supply side, gold warehouse inventories fell by 68,509 troy ounces to stand at 7.82 million troy ounces as of late Thursday, according to Nymex data. Silver supplies rose by 1,040 troy ounces to stand at 131.3 million troy ounces, while copper supplies fell by 164 short tons to 32,839 short tons.

On the LME, copper supplies fell 1,100 metric tons to 150,925 – the lowest level since Nov. 10, 2006, according to BaseMetals.com

Among individual companies, shares of BHP Billiton (BHP) and Rio Tinto (RTP) rallied on Friday. They were responding to a big spike in metals prices as well as a Merrill Lynch report suggesting that BHP could be torn apart and sold at a 30% premium.

AngloGold Ashanti Ltd. (AU), the world's third-largest producer of gold, Friday posted a net loss for the first quarter as production declined and costs rose.

The Johannesburg miner, owned almost 42% by Anglo American Plc (AAUK), said its net loss was 133 million rand ($19 million) against a profit of 69 million rand in the fourth quarter. The company posted a loss of 1.08 billion rand for the year-earlier first quarter.