PRECIOUS-Gold poised for best week in 5 months as Powell hints at rate cuts

* Spot prices have gained more than 3.5% so far this week, on track to log their biggest weekly percentage gain since mid-October, the week when the Israel-Hamas conflict first escalated. This will also be bullion's third straight weekly climb, if gains hold.

* U.S. gold futures edged 0.1% higher to $2,166.70.

* Powell said the U.S. central bank was "not far" from gaining the confidence it needs in falling inflation to begin cutting interest rates, which are likely to happen in the coming months.

* The European Central Bank kept borrowing costs steady at record highs on Thursday while cautiously laying the ground to lower them later this year, saying it had made good progress in bringing down inflation.

* Money market pricing shows traders are pricing in 92 basis points (bps) by the Fed, and 97 bps rate cuts by the ECB this year, as per LSEG's interest rate probability app.

* Lower rates boost the appeal of non-yielding bullion.

* Global stock indexes also rallied to record highs on Thursday, while government bond yields fell.

* Investors will be watching out for a key U.S. non-farm payrolls data due at 1330 GMT.

* The dollar headed for its sharpest weekly drop of the year, while the yen gained on mounting speculation of a rate rise in Japan.

* A softer dollar makes bullion less expensive for other currency holders.