The S&P/TSX composite index dropped 38.53 points to 13,951.77. The Canadian dollar dipped 0.18 of a cent to 91.14 cents US, a day before the Bank of Canada makes its latest announcement on interest rates.
Wall Street was mixed as markets reopened following the Martin Luther King long weekend. The Dow Jones industrials took back early gains and fell 44.12 points to 16,414.44. The Nasdaq jumped 28.18 points to 4,225.76 and the S&P 500 saw an uptick of 5.1 points to 1,843.80.
On the TSX, the gold sector was 0.01 per cent higher, even as February bullion fell $10.10 to US$1,241.80 an ounce on the New York Mercantile Exchange. Barrick Gold (TSX:ABX) lost 47 cents, or 2.18 per cent to C$21.09.
"Gold stocks have had a good run and they're giving back a little now," said Ian Nakamoto, the director of research for 3MACS.
So far this year, gold has been a good performer, despite the day-to-day volatility.
"We're so used to seeing gold stocks being taken to the woodshed but it's really a positive environment for gold," Nakamoto said.
On Monday, the S&P/TSX composite index was a sliver away from closing above 14,000 — a level not seen since early April 2011. It ended the day 102.08 points higher at 13,990.29.
"It doesn't look like it'll do it (close above 14,000) today because of the gold and materials sector," Nakamoto said.
In corporate news, shares in Bombardier Inc. (TSX:BBD.B) fell after the company announced that it plans to lay off 1,700 workers from its aerospace division, mostly around Montreal. The cuts represent six per cent of the Bombardier Aerospace workforce. Its shares fell 16 cents, or 3.889 per cent, to $3.95.
Elsewhere on the TSX, the health-care sector took the largest losses, dropping by 1.52 per cent.
The materials sector was down 0.88 per cent as shares in Agrium (TSX:AGU) declined $1.34, or 1.28 per cent, to $103.03. The fertilizer producer issued new guidance for its fourth-quarter earnings on Monday, saying that it expects them to be at the "bottom" of previous estimates.
It had said earlier it expected earnings to be between 80 cents US to US$1.25 per diluted shares.
Agrium said its updated guidance was primarily due to lower than expected selling prices across all wholesale nutrients in the quarter and lower than expected urea ammonium nitrate and domestic potash sales volumes, partly due to problems with rail shipments.
The metals and mining sector took back 0.59 per cent, with March copper ahead a penny at US$3.35 a pound. The February crude oil contract moved up 62 cents to US$94.99 a barrel.
In economic news, Statistics Canada says manufacturing sales increased 1.0 per cent in November to $50.5 billion, the sixth advance in seven months. It says the November rise brings sales to their highest level since December 2011.
The increase in November largely reflected gains in the transportation equipment and machinery industries. Sales rose in 11 of 21 industries, representing about 58 per cent of manufacturing.
Markets had been uneasy on Monday with data suggesting that China's fourth-quarter growth declined slightly, but confidence rebounded after the Chinese central bank promised to inject extra liquidity into its financial system.
The move comes ahead of the Lunar New Year's holiday, when credit often is tight.