Gold varies between $1,700 and $1,600 a week before the Fed meeting

Even without Fed officials continually bombarding the airwaves with suggestions of a rate hike, gold's position above $1,700 remains shaky.

In post-settlement trading on Wednesday, gold futures for August delivery on New York's Comex slipped again below $1,700 an ounce, a week before the central bank's announcement on July interest rates, after finishing the official session just above the crucial psychological support.

August was trading at $1,698.15, down $12.55, or 0.7%, at 2:16 PM ET (18:16 GMT).

Following a daily fall of $10.50, or 0.6%, it closed at $1700.20, putting the session close to the $1700 mark.

Despite Fed officials' normal 10-day speech restriction leading the July 27 rate decision, gold bulls have been unable to propel the market significantly higher from last week's 11-month low of $1,695.

With the exception of the dollar's first rebound in over a week, although to levels well below last week's 20-year highs, no major reason contributed to gold's resumption of its drop on Wednesday.

Phillip Streible, precious metals strategist at Blueline Futures in Chicago, observed, "There was consensus that if the dollar rebounds, gold might fall below $1,700, and I believe that's what you're witnessing."

The Dollar Index, which compares the U.S. dollar to six other major currencies, revisited 2002 highs last week as the US Consumer Price Index for the year to June reached four-decade highs of 9.1%. The ensuing dollar increase prompted money market traders to speculate on an unprecedented 100-basis-point Fed rate hike in July. Since then, the current consensus forecasts a 75-basis-point increase in interest rates.

In addition to the absence of Fed comments, U.S. macroeconomic data have been especially poor this week, providing traders more leeway with regard to direction, fund flows, and trading volumes. Although gold bulls had an equal chance of seizing the initiative, their passivity has seemed to constitute a greater proportion of their bravery.