* Futures contract for Feb ends up $1.20 at $1,660.70/oz
* Spot gold holds near $1,660
* London markets closed for Boxing Day holiday
(Recasts, updates prices to close of US futures session)
By Barani Krishnan
NEW YORK, Dec 26 Gold edged higher on Wednesday
as thin post-Christmas trading and anticipation that a U.S.
budget deal might be done before the end of the year supported
Trading across commodities was light, curtailed by London's
Boxing Day holiday and year-end festivities elsewhere. U.S.
crude oil outperformed other markets, rising 3 percent to a
6-week high, on technical buying, Middle East tensions and signs
of speedier efforts to avert the U.S. fiscal crisis.
In gold futures, the benchmark February contract on New
York's COMEX settled up $1.20 at $1,660.70 an ounce after
a session high at $1,668.70.
Bullion's spot price hovered near $1,660, versus late
Monday's level of around $1,658.
"Markets are thin, so few large orders can move prices
quickly this week," said George Gero, precious metals analyst at
RBC Capital Markets Global Futures, in New York.
He said renewed efforts by the Obama administration to avert
a fiscal crisis before the end of the year represented one of
the positive factors for gold in Wednesday's session.
President Barack Obama cut short his Christmas holiday in
Hawaii to return to Washington early on Thursday to resume
budget talks with the Republicans, in an effort to prevent some
$600 billion in automatic tax hikes and spending cuts from
kicking in next year. In January, the president, a Democrat,
will be sworn in to serve his second four-year term in office.
While gold is typically a safe-haven asset that gets a boost
from economic uncertainties, it has increasingly been behaving
like a risk asset, and could also gain if a U.S. resolution
Some traders envisioned bullion staying at around current
levels till the year-end, moving between $30 and $40 either way.
"I am still friendly with the market, but it looks like
until the new year starts, it's under pressure from probably
long liquidation," said Yuichi Ikemizu, branch manager at
Standard Bank in Tokyo, citing the U.S. budget talks as one of
the main things on the market's agenda.
"This week, probably we will stay around here at $1,640 to
Gold contracts on the Tokyo Commodity Exchange, which often
influence movements in spot gold, rose after the yen dropped to
a 20-month low against the dollar on growing hopes for further
monetary easing in Japan. <0#JAU:>
Gold demand in India, the world's biggest buyer of the
precious metal, rose as prices eased following a drop in the
world market and on a firm rupee. The actively traded gold
contract for February delivery on the Multi Commodity
Exchange (MCX) was 0.48 percent lower at 30,705 rupees ($560)
per 10 grams as of 0951 GMT.
Gold dealers said there was also buying interest from
bargain hunters and jewelers in other parts of Southeast Asia.
"We don't have enough stocks because of the Christmas
holiday, so supply is a bit tight," said a physical dealer in
Singapore, who noted light buying from Indonesia and Thailand.
(Reporting by Barani Krishnan; Editing by Jan Paschal)