Gold prices steadied on Thursday after rising more than 1% in the previous session, as worries of an early tapering in economic support eased after data showed US consumer price inflation cooled in July.

Spot gold inched 0.1% lower to $1,749.62 per ounce by 0329 GMT, having recorded it biggest one-day percentage gain since May 6 on Wednesday. US gold futures were down 0.1% at $1,751.00.

US consumer price increases slowed in July, data showed on Wednesday, although they remained at a 13-year high on a yearly basis, underpinning the Federal Reserve's argument that inflationary pressures are likely to be transitory.

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"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 US central bank officials have been discussing how and when they should begin to trim the massive pandemic-era asset purchases.

The Fed has made labour market recovery a condition for phasing out its asset purchase programme and raising interest rates.

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

"It is perfectly possible that gold has heavily factored in tapering as inevitable. What may be a negative going forward might be a fast-paced tapering," James Steel, chief precious metals analyst at HSBC wrote in a note.

"Gold is likely to hold or build a base to go modestly higher," Steel added.

The dollar index, meanwhile, was flat and hovered below a more than four-month high hit on Wednesday.

Silver fell 0.5% to $23.40 per ounce. Platinum eased 0.2%, to $1,014.99 and palladium was down 0.1% to $2,633.19.