Gold set for weekly gain on bets of Fed pause

(Reuters) - Gold prices were flat on Friday but set for their biggest weekly gain in nearly two-months, as hopes of a pause in the U.S. central bank's interest rate hike cycle and banking worries bolstered the appeal of the safe-haven metal.

FUNDAMENTALS

* Spot gold was little changed at 2,048.81 per ounce by 0039 GMT, but it was up about 3% for the week. U.S. gold futures were up 0.1% at $2,057.10.

* The U.S. Federal Reserve on Wednesday signalled a likely pause in interest rate hikes.

* PacWest Bancorp is exploring strategic options, including a potential sale or capital raise, after a liquidity boost it announced in March failed to inspire confidence in its ailing share price.

* Economic uncertainty and lower rates boost demand for the zero-yield asset.

* The dollar index was set for a weekly drop, making gold more attractive for overseas buyers.

* Investors will keep a tab on the U.S. Labor Department's non-farm payrolls (NFP) data due at 1230 GMT.

* The European Central Bank slowed the pace of its rate increases on Thursday but signalled more tightening to come.

* Lofty prices have tarnished bullion demand in top Asian retail hubs.

* Spot silver fell 0.3% at $26.00 per ounce, platinum gained 0.3% to $1,042.15 and palladium edged 0.6% higher to $1,456.73.

DATA/EVENTS (GMT)

0145 China Caixin Services PMI April

0600 Germany Industrial Orders MM March

0600 Germany Manufacturing O/P Cur Price SA March

0600 Germany Consumer Goods SA March

0830 UK All-Sector PMI April

1230 US Non-Farm Payrolls April

1230 US Unemployment Rate April

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich)