Gold futures on the COMEX Division of the New York Mercantile Exchange further dropped on Monday, as investors' concern over Eurozone debt issues eased a little bit, reducing safe-haven demand for the precious metal.

The most active gold contract for February delivery lost 8.7 dollars, or 0.5 percent, to 1,608.1 dollars per ounce.

Chancellor Angela Merkel and President Nicolas Sarkozy, the eurozone's two leading powers, said Europe has made progress toward tougher fiscal policies and their goal is to foster growth and job creation.

Merkel said that European leaders will have a new treaty with tougher fiscal rules by the end of this month or by early March.

A trader said that Merkel's comment gave the euro a slight boost. The weaker dollar offered some support to gold earlier in the session, but the comments from European leaders also lessened some concerns about the eurozone, reducing safe-haven demand for the precious metal.

Silver for March delivery added 9.9 cents, or 0.3 percent, to 28.782 dollars per ounce.