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• Spot gold may test resistance at $1,759 - technicals

• Downward trend in gold likely to persist - analyst

Aug 12 (Reuters) - Gold prices edged higher on Thursday, as worries of an early tapering in economic support eased after data showed U.S. consumer price inflation cooled in July and dragged the dollar.

Spot gold rose 0.1% to $1,753.90 per ounce by 0642 GMT, having recorded it biggest one-day percentage gain since May 6 on Wednesday. U.S. gold futures were up 0.2% to $1,756.30.

U.S. consumer price increases slowed in July, data showed on Wednesday, although they remained at a 13-year high on a yearly basis.

“There is a slightly lower risk that the Fed will have to tighten policy aggressively to cap potentially runaway inflation,” said Kyle Rhoda, an analyst at IG Market.

However, the downward trend in gold is likely to persist, Rhoda added.

Meanwhile, a growing number of U.S. central bank officials have been discussing how and when they should begin to trim the massive pandemic-era asset purchases.

While labour market recovery is an important criteria for the Fed to dial back its asset-purchase programme and raise interest rates, it considers current inflationary pressures as transitory.

Gold is viewed as a hedge against higher inflation. However, it is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar.

The dollar index, meanwhile, held below a more than four-month high hit on Wednesday.

“The (gold) market is mostly expecting that economic data will continue to recover but Delta variant concerns could certainly prevent the Fed from wanting to taper sooner rather than later,” Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note.

Spot gold may test a resistance at $1,759, a break above which could lead to a gain into $1,768-$1,785 range, according to Reuters technical analyst Wang Tao.

Elsewhere, silver fell 0.5% to $23.41 per ounce. Platinum eased 0.4% to $1,013.23 and palladium rose 0.1% to $2,639.56.