TOKYO, Feb 21 Gold edged up but was on the defensive on Wednesday after plunges in New Yo

TOKYO, Feb 21 (Reuters) Gold edged up but was on the defensive on Wednesday after plunges in New York the previous day as funds liquidated positions reflecting falls in energy prices and a firmer dollar against the yen.

Bargain-hunting by Japanese investors lifted cash gold from lows, but traders were reluctant to chase gold too aggressively after the plunges in New York and with Chinese players out from the market due to their Lunar New Year holidays.

''Funds pulled out from gold mainly on the dollar's strength and sharp falls in oil, but we were expecting such a move to happen after seeing sharp gains in the last few weeks,'' said Koji Suzuki, an analyst at Kazaka Commodity Co. Ltd.

''Gold may be put under more pressure, but we are watching whether it can hold above $655 in the near term.'' As of 0700 GMT, cash gold was trading at $659.40/660.40 an ounce, up from $658.40/659.15 late in New York on Tuesday when it fell as far as $655.40 an ounce -- the lowest since Feb. 8.

Technical trend for gold deteriorated after it dipped below key near-term moving average lines. It was below the seven-day moving average of $665 and the 14-day average of $660.

On Monday, it climbed to a seven-month high of $673.20.

Falls in oil prices and the dollar's strength against the yen pressured gold in New York the previous day.

On Tuesday, U.S. crude oil futures fell almost 2 percent, as milder weather in the U.S. Northeast was expected to curb heating oil demand.

New front-month U.S. crude for April delivery was down 51 cents at $58.34 a barrel on the Globex electronic trading platform on Wednesday. The March contract expired at the end of the Tuesday session, settling at $58.07, down $1.32.

The dollar was trading at 120.39/40 yen on Wednesday after falling to a one-month low of 118.98 yen last week.

''Gold is a bit higher on bargain-hunting by Japanese players, but the market may have entered a corrective phase,'' said a trader at a Japanese trading company.

''We need to see whether much of long built above $660 have been squared off yesterday. The market could be capped above the level for while,'' the trader said.

Japanese gold futures fell more than 1 percent, tracing falls in cash gold, but they were off their early lows on bargain-hunting.

The key Tokyo Commodity Exchange gold contract for December delivery closed down 31 yen or 1.2 percent at 2,575 yen a gram. It fell as low as 2,560 yen -- the weakest since Feb. 8.

Traders said the gold market so far showed no direct impact after the Bank of Japan raised interest rates to 0.5 percent.

''The BOJ's rate rise gave no big surprise to move the yen sharply, so gold was generally calm,'' said Hisaaki Tasaka, market analyst at Ace Koeki Co. Ltd.

''Gold is generally in downward pressure as funds looked keen to lock in their profits, but I think it will be supported as there are plenty of gold ETF-related buying.'' Platinum edged up to $1,205/1,210 an ounce compared with $1,205/1,210 in New York on Tuesday.

Palladium inched up to $335/340 an ounce from $333.00/338.00 in New York.

Silver was little changed at $13.78/13.83 an ounce from $13.81/13.86 late in New York.

REUTERS KR DS1404