diff --git a/packages/components/CHANGELOG.md b/packages/components/CHANGELOG.md
index 37dd824c6b6247..825839531b0bdc 100644
--- a/packages/components/CHANGELOG.md
+++ b/packages/components/CHANGELOG.md
@@ -15,6 +15,8 @@
 -   `ColorPicker`: fix layout overflow [#42992](https://github.com/WordPress/gutenberg/pull/42992)).
 -   `ToolsPanel`: Constrain grid columns to 50% max-width ([#42795](https://github.com/WordPress/gutenberg/pull/42795)).
 -   `Popover`: anchor correctly to parent node when no explicit anchor is passed ([#42971](https://github.com/WordPress/gutenberg/pull/42971)).
+-   `ColorPalette`: forward correctly `popoverProps` in the `CustomColorPickerDropdown` component [#42989](https://github.com/WordPress/gutenberg/pull/42989)).
+-   `ColorPalette`, `CustomGradientBar`: restore correct color picker popover position [#42989](https://github.com/WordPress/gutenberg/pull/42989)).
 
 ### Enhancements
 
diff --git a/packages/components/src/color-palette/index.js b/packages/components/src/color-palette/index.js
index 024fabdb672028..876c9ccbf1f3bb 100644
--- a/packages/components/src/color-palette/index.js
+++ b/packages/components/src/color-palette/index.js
@@ -112,19 +112,35 @@ function MultiplePalettes( {
 	);
 }
 
-export function CustomColorPickerDropdown( { isRenderedInSidebar, ...props } ) {
+export function CustomColorPickerDropdown( {
+	isRenderedInSidebar,
+	popoverProps: receivedPopoverProps,
+	...props
+} ) {
+	const popoverProps = useMemo(
+		() => ( {
+			__unstableShift: true,
+			...( isRenderedInSidebar
+				? {
+						// When in the sidebar: open to the left (stacking),
+						// leaving the same gap as the parent popover.
+						placement: 'left-start',
+						offset: 34,
+				  }
+				: {
+						// Default behavior: open below the anchor
+						placement: 'bottom',
+						offset: 8,
+				  } ),
+			...receivedPopoverProps,
+		} ),
+		[ isRenderedInSidebar, receivedPopoverProps ]
+	);
+
 	return (
 		<Dropdown
 			contentClassName="components-color-palette__custom-color-dropdown-content"
-			popoverProps={
-				isRenderedInSidebar
-					? {
-							placement: 'left-start',
-							offset: 20,
-							__unstableShift: true,
-					  }
-					: undefined
-			}
+			popoverProps={ popoverProps }
 			{ ...props }
 		/>
 	);
diff --git a/packages/components/src/color-palette/test/__snapshots__/index.js.snap b/packages/components/src/color-palette/test/__snapshots__/index.js.snap
index cca33e76e0e926..f229e98a0278fa 100644
--- a/packages/components/src/color-palette/test/__snapshots__/index.js.snap
+++ b/packages/components/src/color-palette/test/__snapshots__/index.js.snap
@@ -357,6 +357,13 @@ exports[`ColorPalette Dropdown should render it correctly 1`] = `
 
 <Dropdown
   contentClassName="components-color-palette__custom-color-dropdown-content"
+  popoverProps={
+    Object {
+      "__unstableShift": true,
+      "offset": 8,
+      "placement": "bottom",
+    }
+  }
   renderContent={[Function]}
   renderToggle={[Function]}
 >
@@ -728,6 +735,13 @@ exports[`ColorPalette should render a dynamic toolbar of colors 1`] = `
         >
           <Dropdown
             contentClassName="components-color-palette__custom-color-dropdown-content"
+            popoverProps={
+              Object {
+                "__unstableShift": true,
+                "offset": 8,
+                "placement": "bottom",
+              }
+            }
             renderContent={[Function]}
             renderToggle={[Function]}
           >
diff --git a/packages/components/src/custom-gradient-bar/control-points.js b/packages/components/src/custom-gradient-bar/control-points.js
index 65856d3069f6a9..44e31ef4f784ff 100644
--- a/packages/components/src/custom-gradient-bar/control-points.js
+++ b/packages/components/src/custom-gradient-bar/control-points.js
@@ -17,6 +17,7 @@ import { LEFT, RIGHT } from '@wordpress/keycodes';
  * Internal dependencies
  */
 import Button from '../button';
+import { HStack } from '../h-stack';
 import { ColorPicker } from '../color-picker';
 import { VisuallyHidden } from '../visually-hidden';
 import { CustomColorPickerDropdown } from '../color-palette';
@@ -73,23 +74,16 @@ function ControlPointButton( { isOpen, position, color, ...additionalProps } ) {
 	);
 }
 
-function GradientColorPickerDropdown( {
-	isRenderedInSidebar,
-	gradientPickerDomRef,
-	...props
-} ) {
-	const popoverProps = useMemo( () => {
-		const result = {
-			className:
-				'components-custom-gradient-picker__color-picker-popover',
-			position: 'top',
-		};
-		if ( isRenderedInSidebar ) {
-			result.anchorRef = gradientPickerDomRef.current;
-			result.position = 'bottom left';
-		}
-		return result;
-	}, [ gradientPickerDomRef, isRenderedInSidebar ] );
+function GradientColorPickerDropdown( { isRenderedInSidebar, ...props } ) {
+	// Open the popover below the gradient control/insertion point
+	const popoverProps = useMemo(
+		() => ( {
+			placement: 'bottom',
+			offset: 8,
+		} ),
+		[]
+	);
+
 	return (
 		<CustomColorPickerDropdown
 			isRenderedInSidebar={ isRenderedInSidebar }
@@ -163,7 +157,6 @@ function ControlPoints( {
 		return (
 			ignoreMarkerPosition !== initialPosition && (
 				<GradientColorPickerDropdown
-					gradientPickerDomRef={ gradientPickerDomRef }
 					isRenderedInSidebar={ __experimentalIsRenderedInSidebar }
 					key={ index }
 					onClose={ onStopControlPointChange }
@@ -256,21 +249,25 @@ function ControlPoints( {
 								} }
 							/>
 							{ ! disableRemove && controlPoints.length > 2 && (
-								<Button
-									className="components-custom-gradient-picker__remove-control-point"
-									onClick={ () => {
-										onChange(
-											removeControlPoint(
-												controlPoints,
-												index
-											)
-										);
-										onClose();
-									} }
-									variant="link"
+								<HStack
+									className="components-custom-gradient-picker__remove-control-point-wrapper"
+									alignment="center"
 								>
-									{ __( 'Remove Control Point' ) }
-								</Button>
+									<Button
+										onClick={ () => {
+											onChange(
+												removeControlPoint(
+													controlPoints,
+													index
+												)
+											);
+											onClose();
+										} }
+										variant="link"
+									>
+										{ __( 'Remove Control Point' ) }
+									</Button>
+								</HStack>
 							) }
 						</>
 					) }
@@ -288,12 +285,10 @@ function InsertPoint( {
 	insertPosition,
 	disableAlpha,
 	__experimentalIsRenderedInSidebar,
-	gradientPickerDomRef,
 } ) {
 	const [ alreadyInsertedPoint, setAlreadyInsertedPoint ] = useState( false );
 	return (
 		<GradientColorPickerDropdown
-			gradientPickerDomRef={ gradientPickerDomRef }
 			isRenderedInSidebar={ __experimentalIsRenderedInSidebar }
 			className="components-custom-gradient-picker__inserter"
 			onClose={ () => {
diff --git a/packages/components/src/custom-gradient-bar/index.js b/packages/components/src/custom-gradient-bar/index.js
index 088ccd994297a5..6898619e086431 100644
--- a/packages/components/src/custom-gradient-bar/index.js
+++ b/packages/components/src/custom-gradient-bar/index.js
@@ -136,9 +136,6 @@ export default function CustomGradientBar( {
 							__experimentalIsRenderedInSidebar={
 								__experimentalIsRenderedInSidebar
 							}
-							gradientPickerDomRef={
-								gradientMarkersContainerDomRef
-							}
 							disableAlpha={ disableAlpha }
 							insertPosition={ gradientBarState.insertPosition }
 							value={ controlPoints }
diff --git a/packages/components/src/custom-gradient-picker/style.scss b/packages/components/src/custom-gradient-picker/style.scss
index 10d15992566aa6..2b62dfcf7debe0 100644
--- a/packages/components/src/custom-gradient-picker/style.scss
+++ b/packages/components/src/custom-gradient-picker/style.scss
@@ -59,11 +59,8 @@ $components-custom-gradient-picker__padding: $grid-unit-20; // 48px container, 1
 	}
 }
 
-.components-custom-gradient-picker__color-picker-popover .components-custom-gradient-picker__remove-control-point {
-	margin-left: auto;
-	margin-right: auto;
-	display: block;
-	margin-bottom: $grid-unit-10;
+.components-custom-gradient-picker__remove-control-point-wrapper {
+	padding-bottom: $grid-unit-10;
 }
 
 .components-custom-gradient-picker__inserter {