Lower interest rates reduce the opportunity cost of holding a non-interest-bearing bullion.
Spot gold was up 0.7% at $2,085.76 per ounce by 0353 GMT. Earlier in the session, bullion surged to an all-time high of $2,111.39.
U.S. gold futures rose nearly 1% to $2,107.60.
"After his (Powell) speech, traders were more convinced that we're currently at the peak of the U.S. interest rates and therefore that the path forward from here is more likely to be down rather than up," said KCM Trade chief market analyst Tim Waterer.
"Liquidity does tend to exacerbate some moves in the market ... and also still there are safe-haven buying element there as well," Waterer said.
Powell on Friday said "the risks of under- and over-tightening are becoming more balanced," but the Fed is not thinking about lowering rates right now.
Traders are now pricing in a 70% chance for a rate cut by the U.S. central bank by next March, CME's FedWatch Tool showed.
The market viewed his comments as dovish, sending the dollar index and 10-year Treasury yields lower on Friday, making gold more attractive for other currency holders. [USD/] [US/]
Backing market sentiment, data last week pointed out to cooling inflationary pressures, a gradually easing labour market, with Fed Governor Christopher Waller flagging a possible rate cut if inflation continues to decline.
Investor focus now shift to U.S. non-farm payrolls data - a key employment report due on Friday, that could influence the outlook for U.S. interest rates.
Spot silver rose 0.1% to $25.45 per ounce, palladium fell 0.4% to $929.93 per ounce, and platinum was down 0.1% at $999.35.
(Reporting by Harshit Verma in Bengaluru; Editing by Sherry Jacob-Phillips)
By Harshit Verma
