* Dollar index edges up from 15-month low
* Spot gold breaks above long-term downtrend -analyst (Rewrites throughout, updates prices; adds comment, second byline, NEW YORK dateline)
By Marcy Nicholson and Eric Onstad
NEW YORK/LONDON, Aug 1 (Reuters) - Gold prices rose to a seven-week high on Tuesday, after U.S. economic data showed lukewarm inflation and nearly flat consumer spending, raising the question of whether the Federal Reserve will raise interest rates in the coming months.
Spot gold XAU= rose 0.3 percent to $1,273.26 an ounce by 1:49 p.m. EDT (1749 GMT), after rising to $1,273.97, the highest since June 14. It rose 2.2 percent last month, its biggest monthly gain since February.
U.S. gold futures GCcv1 for August settled up 0.5 percent at $1,279.40.
"The continuation of weakness in the data is having people question the Fed and if inflation will be able to pick up longer term, and that's what's really driving (gold)," said Ryan McKay, associate commodities strategist for TD Securities.
"People are starting to question (a U.S. rate hike) more and we've seen a rebound from the lows of $1,200, and I think that's due to people becoming less certain that this is going to happen."
The dollar edged higher as investors consolidated positions, after the falling to a 15-month low on U.S. political uncertainty and lackluster data, which kept the Federal Reserve's policy outlook uncertain. USD/ firmer dollar makes commodities such as gold that are priced in the greenback more expensive to buyers outside of the United States.
A measure of U.S. factory activity fell from a near three-year high in July, consumer spending barely rose, and there was little sign of inflation. for the first time on a monthly close, gold broke above a downtrend that had prevailed since the high in 2011. This is quite a bullish technical signal and potentially demonstrating the start of a new trend," said analyst Jonathan Butler at Mitsubishi in London.
Investors are also looking ahead to the U.S. non-farm payrolls data later this week and how that will affect the dollar.
"We continue to expect the Fed to remain on hold in the coming months, and then to hike by 25 basis points in December, while the balance sheet adjustment should be gradual, setting a favorable backdrop for gold," Standard Chartered (LON:STAN) analyst Suki Cooper said in a note.
In other precious metals, silver XAG= fell 0.2 percent to $16.75 per ounce.
Palladium XPD= gained 1 percent to $891.90 per ounce, after it hit a near seven-week high of $900. It rose almost 5 percent in July.
Platinum XPT= climbed 1.2 percent to $947.10 per ounce, after rising to $947.60, a high since June 14. It closed July higher, its first monthly gain since February.