The price of spot gold traded lower in Asia today, down $2 from Monday's US close to a new one-week low of $641.20 just ahead of the London opening.

Against Sterling, gold fell below £332.50 before recovering to £344 per ounce.

French and German buyers saw gold drop to €486 per ounce as European stock markets began to open Wednesday sharply lower.

Gold's losses continued the pattern seen late Tuesday when US stocks sold off and the metal dropped alongside. Today so far, it's matched further sharp declines in Asian equities, themselves driven by fears a slowdown in the US economy.

In Tokyo, the Nikkei 225 closed 2.9% lower as export firms including Honda and Toyota – which made one-third of its 2006 profits in the US – shed 3.5%.

Only three stocks on Japan's big board closed higher, while Shanghai stocks suffered their greatest loss since March 1st, dropping 1.6% on average.

Taiwan Semiconductors, the world's largest chip-maker, lost 1.7%. Chartered Semiconductors in Singapore, which supplies Microsoft's Xbox 360, lost 4.7%. In Seoul, the world's largest LCD manufacturer, Samsung, sank 2.7%.

"A slowdown in demand in the [US] housing market," said one Taipei fund manager to Bloomberg, "will mean a drop in consumption for electronics and appliances that go into houses."

But the slowdown in US housing has already begun, bringing with it the slowdown in retail spending reported by Washington on Tuesday.

Yesterday also brought news that foreclosures on so-called "subprime" home-loans – high risk lending to poor credit borrowers – are running at a four-year high.

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"The subprime default issue won't just be a short-term impact," reckons a Korean fund manager managing $3.2 billion in equities.

"It will continue to affect markets in the first and second quarters. The bad loans will lead to a fall in US home prices, which will damp consumer spending and slow the economy."

All this gloom in equities might be expected to boost investment demand for gold.

But carried higher on the same wave of speculation as stocks and emerging-market bonds early in 2007, the metal continues to suffer as investors switch into cash.

"Worries that we might have another risk aversion sell-off after further weakness in both the US mortgage market and housing sector were a major factor in yesterday's fall in the gold price," said Investec Australia earlier today in Sydney.

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The Japanese Yen continues to rise, pushing the Euro down to ¥152.60 as the opening in Frankfurt, as Tokyo investors repatriate cash.

US investors are also growing wary, even though they remain bullish on US stocks longer-term.

A poll for Bloomberg reports today that 28% of affluent US investors expect this year's equity markets to underperform 2006. Only 10% expect higher returns – reversing the numbers seen this time last year.

But over the next decade, more than 60% expect US stocks to deliver the highest returns of any asset class, up from 50% last year.

"Almost three-quarters expected stocks in the next decade to equal or better the 9 percent annual return they've racked up over the last 10 years," says Bloomberg. "That compares with 70 percent last year."

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