* Dollar pulls back after post-U.S. election rally
* Outflows from gold exchange-traded funds weigh
* Palladium touches six-week low at $654.25/oz
* GRAPHIC-2016 metal returns: http://tmsnrt.rs/2eqHKkL (Updates prices, adds comment)
By Jan Harvey
LONDON, Dec 21 (Reuters) - Gold rose on Wednesday as a retreat in the dollar from the previous session's 14-year peak prompted some buyers to hunt bargains after the metal's sharp slide from its November high.
The metal had been hit hard by a surge in the dollar after the November U.S. elections, and a more hawkish tone from the Federal Reserve after it hiked U.S. interest rates for only the second time in a decade last month.
Prices had fallen more than 11 percent since the elections, before finding a floor at around $1,125 an ounce.
Spot gold XAU= was up 0.3 percent at $1,134.60 an ounce at 1450 GMT, while U.S. gold futures GCv1 for February delivery were up $2.70 an ounce at $1,136.30.
Gold is taking some support from moves in the wider markets, Commerzbank (DE:CBKG) analyst Carsten Fritsch said. "The U.S. dollar is slightly weaker and U.S. bond yields are slightly lower as well," he said.
"Liquidity will dry up in the run-up to Christmas and the year-end," he added. "So everything can happen, huge volatility or lacklustre trade."
The dollar fell on Wednesday from the 14-year high it hit the day before, pausing in a post-U.S. elections run higher that has represented its entire gain for the year, while concerns over the banking sector pulled European shares lower. FRX/
The Fed, which raised interest rates last week, signalled three more increases next year. Gold is highly sensitive to rising U.S. rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Hefty outflows from gold-backed exchange-traded funds of late have been pressuring gold, HSBC said in a note.
"Declines of 300,000 ounces reported Monday night are the latest in more than a month of consecutive gold ETF outflows," it said. "The GLD (NYSE:GLD), the world's largest gold ETF, has fallen 13 percent to 26.6 million ounces since the U.S. November elections."
Among other precious metals, silver XAG= was down 0.4 percent at $16.01 an ounce, off the previous day's low of $15.59 an ounce, its weakest since April 11. Platinum XPT= was 0.2 percent lower at $913.60 an ounce.
Palladium XPD= was down 0.9 percent at $658 an ounce, having earlier touched a six-week low of $654.25.
It remains the best performing precious metal this quarter, with a drop of just 8 percent, compared with a 14 percent drop in gold prices and an 11 percent retreat in platinum.