Is the sentence and 'gathered back' OK?

Yes, the sentence is acceptable. You have confused the expression somewhat, however. "The youth then gathered back at the church for evening prayer and a sermon by the pastor." There is no standard locution "gathered back." Rather, "back at the church" is a reasonable construction to mean that they returned to the church to reform their group, which may have been separated by other activities earlier.

Thanks, Setanta.

I notice you have changed "youths" to "youth". Is there a difference?

Yes--the difference between my correctly transcribing the text, and my having goofed up. "Youths" it ought to have been.

In British English the noun 'youth' has different meanings depending on whether it is used as countable or non-countable (mass). 'A/the youth' (countable) refers to an older male teenager or young man (say under 21) whereas 'the youth' (non countable) could refer generically to a group* of (or all of) young people of either sex.

*Such as the younger portion of a congregation. (Esp. US)

These usages are not very common these days in BrE, but I have seen examples in US usage. I have heard older Jamaicans talk about "the youth" when they mean "young people today".

Thus Setanta's "mistake" was, in a way, no such thing.