By Pratima Desai LONDON, Oct 19 (Reuters) - Gold slid on Wednesday as higher hopes of a resolution to the euro zone debt crisis persuaded investors to shrug off a downgrade to Spain's credit rating and opt for equities, but a softer dollar helped provide some support. Spot gold was bid at $1,653.30 a troy ounce at 0945 GMT from $1,658.64 an ounce late in New York on Tuesday. European stocks and the euro rose on optimism policymakers will take major steps at a summit this weekend to solve the festering debt crisis and offset the impact from a cut to Spain's sovereign credit rating. That was denied by senior European Union officials, but not before the tone for the day was set. "When risk appetite increases then there's more (gold) selling," said Carsten Fritsch, an analyst at Commerzbank, adding that a main reason for the price fall since early September was forced selling to cover losses in other markets. Gold has fallen nearly 15 percent since hitting a record high of $1,920.30 on September 6. Also a factor behind lower prices has been investors choosing to buy U.S. Treasury bonds as a safe place to park assets, instead of gold. Indirectly that means demand for dollars, which when it rises makes gold more expensive for holders of other currencies. "The dollar is softer today, but gold has been down nearly one percent today ... That relationship appears to have gone AWOL," a precious metals trader said. CRISIS MANAGEMENT Reports that France and Germany had agreed to boost a euro zone rescue fund to two trillion euros ($2.76 trillion) came ahead of a meeting of euro zone leaders on Oct. 23 to discuss further aid for Greece. "The situation with gold could well change should risk aversion escalate after 23 October, provided the broader market is disappointed by the EU's debt crisis management with policymakers failing to leverage the EFSF substantially and avoid a structural Greek default," VTB capital said in a note. "Global gold (exchange traded funds) are already seeing small inflows, while physical buyers were active above recent dips." Looking ahead the wedding season in India is expected to generate strong physical buying interest, traders said. "Stronger inflows into SPDR will be a good indication of investors coming back to the market," a trader said. Holdings of the largest silver-backed ETF, New York's iShares Silver Trust dipped 0.61 percent on Tuesday from Monday, while that of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust remained unchanged for the same period. Spot silver was at $31.79 an ounce from $32.03 late on Tuesday, platinum at $1,531.75 from $1,527.75 and palladium at $617.47 from $617.86. (Reporting by Pratima Desai; editing by Jason Neely)

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