LibGDX project creation tool using Gradle 6.7.1 which doesn't support my JDK version (17)

Solution 1:

From the LibGDX setup documentation:

At the moment, libGDX projects do not work with JDK 16, as Gretty does not yet support Gradle 7. As a consequence, you are advised to use JDK 8-15!

So if it doesn't work with JDK 16 it certainly won't work with JDK 17. Go back to JDK 15 or wait until JDK 17 is supported (could be a long time).