Symptoms

  1. When killing gnome-settings-daemon with the terminal command killall gnome-settings-daemon, your mouse appears.
  2. When running gnome-settings-daemon again, your mouse will disappear!

Solution

Open dconf-editor and navigate to: org/gnome/settings-daemon/plugins/cursor and set 'active' to false (un-ticked).

Credit

Credit for this solution goes to a fellow Arch Linux user 'Wey'. You can see his comment here