The SNB's move could be construed as unfavorable for gold as it burnishes the franc's appeal as a harbor from risk. However, the uncertainty it has sparked led to the opposite effect, lifting bullion to levels not seen since September.
"The mechanics of the situation are a bit negative for gold, but the thing that is helping gold is the uncertainty," Macquarie analyst Matthew Turner said.
"We're seeing these huge macro shifts and some of them are bearish for gold, but just the fact that they're happening is bullish, because it creates uncertainty and the feeling that central banks are losing control again. That's the positive backdrop for gold."
The Swiss franc soared 15 percent after the SNB abandoned its three-year-old cap against the euro, sending a shockwave through financial markets which saw the dollar index sink and major stock markets gyrate.
Gold hit a four-month high of $1,263.90 an ounce, taking its gain for the year to more than 6 percent.
The precious metal has benefited from turmoil in wider markets this year, which has sent investors scurrying for assets seen as a safe store of value, like bullion, U.S. and German government bonds, the Swiss franc and the Japanese yen.
Rhona O'Connell, head of metals research at GFMS, said suggestions within the SNB's press release that policy divergence in the major currency areas is expected to increase -- suggesting the dollar will appreciate against other currencies -- also flagged potential headwinds for bullion, which benefits from dollar weakness.
The SNB has been under growing pressure to revisit the peg as speculation grows that the European Central Bank could introduce outright money-printing as early as next week, which could see the euro zone flooded with liquidity.
That could lead to a rise in euro-priced gold as the currency devalues, analysts said, though spot prices could suffer from a resulting rise in the dollar.
While volatility in the wider financial markets will overall be gold positive, the impact of the end of the euro-franc peg is still unclear, analysts said.
"This move by the SNB has created a lot of dust, which needs to settle over the coming days before we're able to see more clearly the way things are going for gold," Julius Baer analyst Carsten Menke said.
(Reporting by Jan Harvey; Editing by Veronica Brown and Susan Thomas)
By Jan Harvey
