A precursor of this trick can be seen in a fortunetelling method dating back at least to the 1800s. A large key is bound tightly between the pages of a Bible, with the grip of the key sticking out at the top. Two people extend their forefingers to support the key and Bible, each placing a fingertip under one side of the key grip. They would then ask a question, and the key and Bible would turn to indicate a letter, number, yes or no. This is described in W(illiam). H(enry). Cremer’s The Secret Out (1871, p. 223). Since Cremer's books were mainly compilations of earlier writings, this idea is probably much older. In Eugene Burger's Spirit Theater, 1986, p. 136, Bruce Bernstein gives some further history on this idea, and suggests using just the key on two fingertips.
The well-known trick of making a key turn on the palm of the hand is also quite old, but early print references for it have proved elusive. It was commonly sold by magic dealers. By the mid-1900s it was considered old and widely known.
A variant handling by Joseph Kolar, in which the key is balanced at the tips of the finger and thumb was sold by the B. L. Gilbert Co. as a single-page instruction sheet, likely issued sometime in the 1920s; see "The Spooky Key and Spoon" and The Linking Ring, Vol. 25 No. 6, Aug. 1945, p. 108.
In the Phoenix, No. 246 (Jan. 11, 1952, p. 984), Dr. Jaks explained another position for the key, balanced on the tip of the second finger, rather than placing it on the palm.
Punx of Germany recommends a somewhat different position of the hand for the Jaks fingertip balance in his book Setzt euch zu meinen Füßen… (1977, p. 41); English translation, Magical Adventures and Fairy Tales (1988, p. 47).
Malcolm Davison gave details on fine-tuning the balance of the key and its handling in “A Key Secret”, which appeared in New Pentagram, Vol. 20 No. 3, May 1988, p. 22.