SINGAPORE, Feb 12 Gold jumped above $ 668 an ounce on Monday to its highest in seven mont

SINGAPORE, Feb 12 (Reuters) Gold jumped above $668 an ounce on Monday to its highest in seven months on continued fund buying but weaker oil prices and a market holiday in key player Japan capped gains.

Spot gold hit an intraday high of $668.20 an ounce, its best since mid-July, before slipping to $666.00/666.70 an ounce by 0133 GMT, steady from $666.50/667.20 late in New York.

Gold rose around 1 percent in the US market on Friday after crude oil regained $60 a barrel for the first time since early January, triggering fund buying and short covering. Firm oil prices raise gold's appeal as a hedge against inflation.

''I think post-G7, there's speculation about where the yen would go, what that would possibly also mean, I suspect for gold, with Japanese fears of inflation,'' said Darren Heathcote of Investec Australia in Sydney.

''We might see more of a rection tomorrow when TOCOM reopens.

Certainly, gold is technically looking strong. I see no reason why, at this present moment, we wouldn't want to head north again to test recent highs,'' he said.

Upside targets were pegged around $676 and $684 an ounce.

Purchases from Japanese investors helped gold reach multi-year highs last year. Gold hit a 26-year high of $730 an ounce in mid-May.

US crude oil fell as tensions with Iran eased and after Saudi Arabia's oil minister was quoted as saying OPEC may not need to cut or raise output when it meets in a month's time if healthier market conditions prevail.

But the price held above $59 a barrel as a cold snap in the United States was forecast to continue through the week. The price reached a session peak of $60.80 on Friday, the highest level since Jan. 3 during intraday activity.

Benchmark gold futures on the Tokyo Commodity Exchange, currently December 2007, ended 37 yen per gram higher at 2,594 yen ($21.30) on Friday on stronger crude oil.

The yen was on the defensive on Monday, garnering little immediate support from the weekend meeting of the Group of Seven which sought to warn investors against selling the yen too aggressively.

Finance ministers and central bankers from the G7 industrialised powers said over the weekend Japan's recovery was on track and expressed confidence that ''the implications of these developments will be recognised by market participants''.

The dollar rose to 121.82 yen from 121.75 late on New York on Friday. The euro was slightly lower at $1.2988 Silver was at $13.84/13.89 an ounce, unchanged from late New York levels. It had rallied to $13.93 an ounce on Friday, a two-month high.

Platinum rose to $1,195/1,200 an ounce from $1,194/1,200, having risen to $1,203 on Friday -- its highest since late November.

Palladium dipped to $334/339 from $337/342 an ounce.

REUTERS DKS PM0801