Falling gold prices helped Canadian markets begin the year on a triple-digit down note Tuesday, while U.S. markets finished in the red for the second day in a row as Federal Reserve Board comments about inflation spooked investors.

At close, Toronto’s S&P/TSX composite index lost 103.67 points or 1.12% to 9142.98. The resources-heavy TSX Venture Exchange slid 37.85 points or 2.07% to 1787.62. Volume on the TSX was 237.3 million shares.

The Dow Jones industrial average slid 98.65 points or 0.92% at 10630.78. The Nasdaq composite index posted its biggest daily loss in five months, sliding 44.29 points or 2.06% at 2107.86, while the Standard & Poor’s 500 index was off 14.03 points or 1.17% at 1188.05.

The Canadian dollar was down more than a cent — 1.41¢ — to US81.78¢ as the U.S. dollar gained ground against other currencies.

On Bay Street, the loss was led by gold stocks, which tumbled 4.18% as the price of bullion fell. Gold futures were off $1.50 at US$427 in the face of a stronger U.S. currency. The TSX metals and mining sub-group slipped 2.96%. Among the more active gold stocks was Wheaton River Minerals, which lost 2.56% to $3.80 in heavy trading. Placer Dome Inc. slipped 4.34% to $21.60.

Energy stocks were also lower, down 1.98% even though the price of oil rebounded Tuesday. Canadian energy stocks were playing catch-up from Monday when prices fell US$1.33 due to continued mild weather in the U.S. Northeast. On Tuesday, prices were bounced back, up US$1.79, or 4% at US$43.91 a barrel on the New York Mercantile Exchange. Among the losers were Suncor Energy Inc., off 5.42% to $41.10, and Petro-Canada, which lost 1.67% to $60.15.

The TSX technology sector was down 2.45%, with Nortel Networks Corp. dipping 0.24% to $4.15 on volume of more than 8.6 million shares.

Financials, up 0.08%, and utilities, up 0.51%, were the only two sub-groups on the TSX in the black.

In New York, markets turned quickly on the release of the minutes of the Federal Open Market Committee’s Dec. 14 meeting, in which a number of Fed officials said a drop in productivity growth, a weakening dollar and high oil prices could all contribute to inflation. The committee members also expressed concern over increased risk-taking in the financial markets.

The minutes hinted that interest rates may have to move higher more aggressively to strengthen the dollar and curb inflation. The Fed had been promising steady, measured hikes in rates, which stand at 2.25% after the Fed’s quarter percentage point increase in December.

Wall Street’s opinion on the matter was quick — the major indices dipped sharply after the minutes released, and trading volumes rose sharply as investors sold off stocks.

Early in the day, there was some enthusiasm as the price of oil rebounded and from a new economic report showing that the nation’s industrial sector continued to gain traction. Factory orders were up 1.2% in November, the Commerce Department said, better than the 1% gain economists had expected.

Among the more active U.S. stocks was Krispy Kreme Doughnuts Inc., which 14.87% to US$10.48 as a shareholder lawsuit alleged the troubled doughnut maker frequently padded its sales figures by overshipping doughnuts to its wholesalers, knowing that many would be returned. Krispy Kreme said it plans to restate earnings for its past fiscal year.

Amazon.com Inc. dropped 5.35% to US$42.14 after Smith Barney downgraded the online retailer’s stock to “sell” from “hold,” citing concerns over increasing competition. Analysts at the brokerage said Amazon will have to invest heavily in marketing and new technologies to retain its leadership position in Internet sales.

Declining issues outnumbered advancers by more than three to one on the New York Stock Exchange, where volume came to 1.32 billion shares, compared with 1.12 billion at the same point on Monday.