Use horseradish powder when you are looking for some sharp biting zing in a sauce. Horseradish powder is a hot, spicy powder that is typically blended into egg or cream based sauces, most commonly sour cream or mayonise and the end result is a potent and hot dipping sauces. With qualities similar to mustard, horseradish also has pungent volatile oils. When cooking horseradish, the spiciness mellows as these oils evaporate. This is often the reason you are more likely to find horseradish in uncooked sauces.