USD/CNH faces pressure as China tightens precious metals oversight

USD/CNH is trading near 7.2850, showing marginal weakness as China announces stricter oversight of precious metals and gemstone transactions starting Friday. The new regulations require reporting of all high-value cash purchases in these markets, signaling Beijing's intensified efforts to monitor capital flows and strengthen financial system transparency. This move could impact dollar demand in China as authorities seek to curb potential money laundering and underground banking activities often facilitated through precious metals trading. The policy aligns with China's broader financial reform agenda and may reduce unofficial dollar circulation channels. Technical indicators show USD/CNH consolidating below the 7.30 resistance level, with immediate support at 7.2750. Traders should monitor how these regulations affect capital flow patterns and yuan stability, as tighter controls typically support the local currency by reducing capital flight opportunities through alternative investment channels.