The South African rand was steady in early trade on Thursday, as geopolitical tensions and safe-haven demand eased after US President Donald Trump backed down from new tariff threats and proposals to annex Greenland by force, while a firmer dollar also pressured prices.

At 0718 GMT the rand traded at 16.26 against the dollar, little changed from its previous close of 16.2550.

Like other risk-sensitive currencies, the rand often takes its cue from global drivers such as US policy.

At the start of the week, Trump's escalating stand-off with European countries sent gold to new highs and helped drive South African rand to a 3-1/2-year high of approximately 16.29 per dollar, said Umkhulu Treasury in a research note.

"The Rand's rally was fuelled by a combination of safe haven demand for gold which surged toward $4 824 per ounce due to ongoing concerns over US Federal Reserve independence, and domestic data showing December inflation held steady at 3.6%, supporting hopes for a balanced interest rate path," said Umkhulu Treasury.

Domestically focused investors looked at inflation data on Wednesday, which showed a slight increase in December, as expected, but analysts said they still expect the central bank to deliver several interest rate cuts this year as price pressures remain well contained.

On the Johannesburg Stock Exchange, the Top-40 index was last down 0.06% in early trade.

South Africa's benchmark 2035 government bond was firmer in early deals, as the yield fell 3.5 basis points to 8.285%.