His comments did little to change market expectations - money markets expect one rate cut later this month and a cumulative 68 basis points of cuts until the end of 2019 - but market watchers said Mr Powell's views will drive the United States dollar.
Against a basket of other currencies, the United States dollar fell 0.2 per cent to 96.83, its lowest since July 5 and near the three-month low of 95.84 from late June. Gold prices have been moving up ever since concerns over US-China trade war have come to the fore.
The Federal Reserve last month downgraded its US inflation projection for 2019 to 1.5% from the 1.8% projected in March.
Palladium fell 0.2% to $1,557.50 an ounce, edging away from a 16-week peak touched in the previous session.
"Once we get a quarter-point rate cut, which markets are widely expecting, Powell will keep all options open on the table, and that means the dollar's outlook is uncertain", said Manuel Oliveri, an FX strategist at Credit Agricole in London.
Thursday's move "is just an adjustment of the fact that maybe it had gone up a little fast yesterday, but is still holding nicely above $US1,400, and it looks like we going to continue holding above $US1,400", he added.
Spot gold rose 1.2% to $1,414.60 per ounce as of 2:20 pm ET (1820 GMT), having made its way to a high of $1,417.20 an ounce. The U.S. currency against major other currencies was largely tepid for a second session.
Policymakers from the U.S. central bank are scheduled to meet on July 30-31, where investors will look for further cues on monetary policy easing. Gold got a boost this week after Fed Chair Jerome Powell in his testimony in Congress indicated on Thursday that a rate cut is likely at the the central bank's next meeting as businesses slow investment due to trade disputes and a global growth slowdown.
As for other precious metals, silver for September delivery was up 7.9 cents, or 0.52 per cent to close at 15.226 dollars per ounce. Gold holdings with SPDR Gold Trust rose 6.46 tn to 800.54 tn on Wednesday, according to data on the website of the world's largest gold exchange-traded fund.