* 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: http://reut.rs/1WAiOSC (Updates throughout; adds comment, second byline, NEW YORK dateline)
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 XAU= 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 GCv1 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 Chicago.
"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. MKTS/GLOB
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. 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 XAG= was up 0.2 percent at $17.12 an ounce, platinum XPT= was flat at $1,047 and palladium XPD= was up 0.1 percent at $589.80 an ounce.
As industry participants gathered in London for Platinum Week, Johnson Matthey (LON:JMAT) 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. 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. 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. GRAPHIC-2016 asset returns:
http://reut.rs/1WAiOSC
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