* 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 (Reuters) – 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 bullion prices.
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 comes through.
Some traders envisioned bullion staying at around current levels till the year-end, moving between $30 and $40 either way.