Spot gold was up 0.8% to $1,409.36 per ounce at 1303 GMT, reversing a decline earlier in the session.
U.S. gold futures were up 0.8% to $1,411.3 per ounce.
"Powell's done enough to convince traders he is not closing the door but leaving it ajar with regards to rate cuts referencing a weaker economy, referencing business growth and stagnating economic growth," said Craig Erlam, senior market analyst with OANDA.
"This is as dovish as we could have potentially hoped for and the gold market has jumped straight on that. The dollar has come off and gold in tandem has rebounded higher."
Helping bullion's reversal, the dollar fell against a basket of currencies following Powell's remarks. Market participants will now scan minutes from the Fed's June meeting, due later in the day.
Expectations for a 50 basis point rate cut this month have faded after forecast-beating job gains reported last week, but investors still expect a 25 basis point cut due to weak inflation and U.S.-China trade war worries.
"Supportive interest towards $1,380 should provide a base over the near term, with potential extension towards $1,360. Resistance meanwhile cuts in initially at $1,400, with extension toward $1,410," MKS PAMP said in a note.
Meanwhile, holdings of SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, fell 0.22% to 794.08 tonnes on Tuesday from 795.80 tonnes on Monday.
On the trade front, White House economic adviser Larry Kudlow said U.S. and Chinese trade officials held a "constructive" phone conversation on Tuesday, marking a new round of talks after the world's two largest economies agreed to a truce in a year-long trade war.
Among other precious metals, silver gained 1.1% to $15.26 per ounce, and palladium was up 2.1% at $1,578.69.
Platinum rose 2.2% to $823.72 an ounce.
(Reporting by Eileen Soreng in Bengaluru; Editing by Deepa Babington and Mark Potter) ((email@example.com; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 6131; Reuters Messaging: firstname.lastname@example.org))