PRECIOUS-Gold extends losses as global stocks, dollar firm

* Global stocks higher after U.S. Presidents Day holiday

* European stocks off earlier highs

* Goldman Sachs recommends shorting gold

* GRAPHIC-2016 asset returns:

* Coming up: January FOMC meeting minutes Wednesday (Recasts; adds comment, byline, NEW YORK dateline; updates prices)

By Marcy Nicholson and Jan Harvey

NEW YORK/LONDON, Feb 16 (Reuters) - Gold fell for the third straight session on Tuesday, as global equity markets and the U.S. dollar rose, depressing interest in gold as a safe-haven asset and taking it further below last week’s one-year high.

Spot gold was down 0.5 percent at $1,203.26 an ounce at 3:05 p.m. EST (2005 GMT). This follows a steep drop of 2.3 percent on Monday, its biggest one-day loss since mid-July.

“Equity markets are continuing to run and that obviously has taken a bit of the safe-haven demand component behind metals,” said David Meger, director of metals trading for High Ridge Futures in Chicago.

“On top of that, renewed dollar strength has continued to pressure the metals complex overall.”

Wall Street stocks gained on Tuesday, extending a rally from Friday, as investors snapped up beaten-down consumer discretionary, industrial and financial stocks. U.S. stocks opened higher after being closed on Monday for the Presidents Day holiday.

U.S. gold futures for April delivery settled down 2.5 percent from where they stood late on Friday at $1,208.20. Most U.S. gold trading was closed on Monday.

“All the major financial drivers have been in concert to help this rise happen - the fed futures curve, the dollar weakening a bit, and equity markets being much weaker than our expectations,” Deutsche Bank analyst Michael Hsueh said.

“In order for us to think that this is going to change into a more meaningful bull market, you would have to believe that the Fed is going to come out with an explicit reversal of their indicated direction, and to go into some kind of easing measures.”

On Tuesday, U.S. Federal Reserve’s Neel Kashkari said he sees a gradual increase in interest rates, while Philadelphia Fed President Patrick Harker said the Fed may be wise to await more evidence of higher U.S. inflation before raising rates again.

Minutes from the Fed’s Jan. 26-27 meeting will be released on Wednesday.

Goldman Sachs’ recommendation to short gold, prompted by the investment bank’s belief that the recent fear-induced rally has been overdone, also stoked a more cautious sentiment for the metal.

Silver was down 0.7 percent at $15.22 an ounce.

UBS Chief Investment Office Wealth Management Research said in a research note it raised its three-month silver price forecast to $13.50-$17.50 per ounce, from $12-$16, and the 12-month forecast to $15.50, from $14.50.

“The lack of catalysts is the key reason for our sideways view, because weak industrial demand persistently hinders recovery,” UBS said.

Platinum was down 0.4 percent at $928.75 and palladium was down 0.9 percent at $507.