Gold price drops on the speculation on the interest rate hike by the Fed this year. Fed Chairwoman Janet Yellen said in a speech at the University of Massachusetts on Thursday that she expects that the Fed will start raising its interest rates by the end of the year, followed by a gradual pace of interest rate hikes.

Today's U.S. economic data was mixed. The U.S. Commerce Department released personal spending and income figures on Monday. Personal spending rose 0.4% in August, exceeding expectations for a 0.3% gain, after a 0.4% increase in July. July's figure was revised up from a 0.3% increase.

Consumer spending makes more than two-thirds of U.S. economic activity. This data showed that the U.S. economy continues to strengthen despite a slowdown abroad.

The personal consumption expenditures (PCE) price index excluding food and energy rose 0.1% in August, in line with forecasts, after a 0.1% gain in July.

On a yearly basis, the PCE price index excluding food and index increased to 1.3% in August from 1.2% in July.

The PCE index is below the Fed's 2% inflation target. The PCE index is the Fed's preferred measure of inflation.

The National Association of Realtors (NAR) released its pending home sales figures for the U.S. on Monday. Pending home sales in the U.S. slid 1.4% in August, missing expectations for a 0.5% gain, after a 0.5% rise in July.

October futures for gold on the COMEX today declined to 1127.50 dollars per ounce.