PRECIOUS-Gold falls from early gains as U.S. equities turn higher

* Gold falls more than $4/oz within 2 minutes
    * Dollar index eases, U.S. shares turn higher
    * Platinum Week kicks off with talk of market deficits
    * GRAPHIC-2016 asset returns:

 (Updates throughout; adds comment, second byline, NEW YORK
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, May 16 (Reuters) - Gold prices turned
slightly negative on Monday, reversing gains of 1 percent on
pressure from strong crude futures and U.S. equity markets.
    Spot gold was down 0.05 percent at $1,272.50 an ounce
at 2:07 p.m. EDT (1807 GMT), after rising as much as 1.2 percent
to $1,288.20. U.S. gold futures for June delivery settled
up 0.1 percent at $1,274.20 an ounce.
    Bullion prices were initially supported by lower stock
markets and soft Chinese data, which boosted interest in the
metal as an alternative asset. Gold prices sharply pared gains,
by more than $4 in just two minutes from 10:30-10:32 a.m. EDT
(1400-1432 GMT), as Wall Street turned higher.
    "This whole drop in gold centers around equity markets,"
said Bob Haberkorn, senior market strategist for RJO Futures in
    "At the same time stocks started rallying, and popped pretty
quick, gold fell."
    Crude futures hit a six-month high as output disruptions
were expected to reduce a long-standing glut in the market,
leading Wall Street higher. The benchmark U.S. Treasury yield
rose and the dollar ticked lower, caught between a weaker
Japanese yen and a stronger euro. 
    Data from China over the weekend showed April's retail
sales, factory output and fixed-asset investment all fell short
of forecasts by economists polled by Reuters. 
    Gold is up 20 percent this year after weak economic data in
the United States and elsewhere tempered expectations of a
near-term increase in U.S. interest rates, which would lift the
opportunity cost of holding non-yielding gold.
    Among other precious metals, silver was up 0.2
percent at $17.12 an ounce, platinum was flat at $1,047
and palladium was up 0.1 percent at $589.80 an ounce.
    As industry participants gathered in London for Platinum
Week, Johnson Matthey said the platinum market deficit was set
to grow this year, as demand from autocatalyst manufacturers is
boosted by the implementation of new Euro 6 legislation.
    Metals Focus predicted platinum's slide to seven-year lows
in January marked the end of the 18-month bear cycle in which
the metal nearly halved in value. It forecast a shortfall in
supply this year. 
    UBS Chief Investment Office Wealth Management Research said
in a note on Monday that it favored platinum over gold as supply
could be challenged, and improving demand could lead to a
narrowing of the current platinum discount to gold.
    The palladium market may need up to three years to consume
its opaque above-ground stocks, according to Russia's Norilsk
Nickel, the world's largest producer of the metal. 

 (Reporting by Marcy Nicholson in New York and Jan Harvey in
London; Additional reporting by Naveen Thukral in Singapore;
Editing by Mark Potter and Richard Chang)