The S&P/ASX200 fell 6.3 points by midday, down 0.07 per cent to 8,989, as the broader All Ordinaries dropped 8.2 points, or 0.09 per cent, to 9,285.
The slump came after the bourse rallied to all-time highs on Thursday, led by four consecutive record-breaking sessions for the raw materials sector.
"If the ASX200 closes on Monday much below short term support 8990 (Thursday and Fridays lows), then it would increase the chances that Thursday's push to new highs was a false break higher," IG Markets analyst Tony Sycamore said.
"Conversely if the ASX200 holds above support at 8990, it leaves its upside prospects intact."
Only three of 11 local sectors were trading lower by lunchtime, but a nearly two per cent tumble in materials stocks weighed heavily on the bourse.
Profit-taking in gold producers dragged on the sector with Evolution and Newmont each tumbling more than five per cent, tracking with a more than three per cent slip in spot gold prices since Friday to $US4,237 ($A6,515) an ounce.
Despite the pullback, the precious metal's record-breaking push could soar higher still, as investment bank RBC Capital Markets revised its middle and high price scenarios to $US4,500 and $US5,000 an ounce.
"Gold may look like a stretched and crowded trade, but uncertainty abounds against a supportive macro backdrop and necessitates another revision higher," RBC's gold strategist Christopher Louney said in a research note.
Iron ore miners were also heavy, with BHP slipping 1.6 per cent to $42.89 as ore prices edged lower below $US105 a tonne.
Rare earths miners were mixed ahead of a key meeting between Prime Minister Anthony Albanese and US President Donald Trump, with supply of the crucial minerals expected to be high on the agenda.
Lynas surged more than seven per cent higher by midday, while Arafura Rare Earths rocketed more than 13 per cent higher. Iluka Resources went in the other direction, falling six per cent.
A 0.6 per cent rise in the heavyweight financials sector couldn't lift the broader market out of the red, as CBA gained 1.1 per cent to lead the big four banks higher.
Shares in Zip Co rallied 4.2 per cent to $4.61 after the buy-now, pay-later provider upgraded its US transaction value forecasts for the 2026 financial year.
IT stocks outperformed the broader market, pushing one per cent higher after a 4.8 sell-off last week.
Energy stocks edged up 0.1 per cent as modest gains in oil, gas and coal producers counterbalanced losses in uranium plays.
Deep Yellow was the hardest hit, tumbling 16.6 per cent to $1.94 after announcing the immediate departure of boss and global uranium veteran John Borsho, who will stick around to assist chief financial officer Craig Barnes to helm the company in the interim.
Defence technology stock Droneshield jumped 2.5 per cent to $4.70 per share after posting a 1000 per cent surge in revenue in respective September quarters.
The Australian dollar is buying 65.06 US cents, up from 64.76 US cents on Friday at 5pm.
17°C