The minus 0.1 per cent benchmark rate will only apply to deposits by lenders with the central bank that exceed regulatory minimums. But the decision to charge banks for holding excess reserves, designed to encourage more money to be injected into the economy, is still a big move and it responds to consistent demands from investors for support.

DailyFX notes that stimulus from central banks should help to improve economic prospects and in theory mitigates risks, reducing the need "for safe-haven assets such as gold". It has also hit the value of the yen, a key reserve currency, relative to the US dollar. This will boost the greenback, against which gold is held as a hedge and is therefore negatively correlated.

Gold plummeted in Asian trading immediately after the announcement, sinking near to $1,100. DailyFX noted that if a key support level of $1,103 was passed, the metal could even push below this key threshold, which had acted as the ceiling of a tight range earlier in January.

But gold has recovered strongly since the bombshell was dropped and was at $1,114 in London at around 10.30am today. This is just less than $5 less than the price at which it had settled yesterday, even despite a strong rally on European markets that has seen the FTSE-100 nudging 6,000 points.

There are diverging opinions on where the precious metal will head from here. Should the economic travails that have prompted market mayhem so far this year prove to be a harbinger of a more serious global slowdown, gold could rise to as high as $1,300, say some observers. Others who do not see another financial crisis emerging reckon weak inflation, a strong dollar and more rate rises from the US Federal Reserve will eventually lead gold lower for the fourth year in a row.

At the moment, with even the usually stoic Bank of Japan resorting to extreme measures, those predicting tougher times ahead that will benefit gold are arguably in greater number. "We envisage that a bottom is firmly in place for gold," Naeem Aslam, Ava Trade`s chief market analyst, told Reuters. "It could be the best performing commodity for this year."

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