Sunday my wife purchased a bag of Hostess mini-donuts coated with powdered sugar and when I popped one in my mouth I immediately spit it out because it had a strong metallic taste that even Listerine wouldn't get rid of.
Powdered sugar, also called confectioner's sugar, is a finely ground sugar made by milling granulated sugar into a powdered state. It also contains a small (3-5 percent) amount of anti-caking agent—usually cornstarch in North America or tricalcium phosphate in other regions—to prevent clumping and improve flow. It is available in different degrees of fineness, most commonly XXX, XXXX, and 10X, with more Xs indicating finer grains.
In industrial food production it is used where a quick dissolving sugar is required. Domestically, it is principally used to make icing or frosting and other cake decorations. It is often lightly dusted onto baked goods to add a light sweetness and subtle decoration.
While cane sugar has an indefinite shelf life the addition of corn starch can result in the corn starch oxidizing which can add a metallic or soapy taste to the powdered sugar. Powdered sugar is also susceptible to absorbing odors if not stored properly sealed. Thus, it is generally a good idea to purchase powdered sugar only in a quantity that you expect to use and throw away any unused portion.
Back in 2013 Hostess launched "the sweetest comeback in the history of ever" and about a year later their white powdered Donettes generated consumer complaints who said when they opened the Donettes they were moldy and smelled like chemicals. Hostess did nothing about the problem and continued to keep the product on the shelf. A Hostess spokesperson acknowledged they had received complaints of the smell and taste but denied the donuts were harmful.
Three years later and this problem appears to be ongoing so it's a good idea to avoid this product.