By Sajith Kumar
ANKARA(BullionStreet): After Turkey confirmed it's gold for oil deal with Iran, it remained under immense pressure from the West, particularly from the US to drop the deal.

US authorities are reported to have conveyed the message to Turkey but the Turks refused to oblige by saying the deal doesn't breach any international laws and US sanctions only prohibit Iran from carrying out transactions in dollars.

Major political parties and bureaucrats in the country are also in favor of the gold deal at the moment but resistances are also coming up, based on the fact that precious gold cannot be traded like that even for oil.

Meanwhile, US is preparing new sanctions against Iran that could force Turkey to stop paying for Iranian gas with gold bullion.

The US Senate is drafting a bill that will ban insurance on shipments of a wider range of goods, including gold, to Iran.

The move was hurried following Turkish Deputy Prime Minister Ali Babacan’s admission last week that Iran buys gold from Turkey using Turkish lira to serve as payment for natural gas that Turkey imports from Iran.

Turkey exported $6.4 billion worth of gold to Iran from January to September. Iran supplies 18 percent of Turkey's gas and 51 percent of its oil needs.

Iran is Turkey's second largest supplier of gas after Russia, with more than 90 percent of Iran's gas exports going to Turkey.

Turkey used to pay Iran in lira but due to it's limited value for buying goods on international markets, Iran demanded gold instead which the Turks agreed.

Since the start of the year, Turkish exports of gold to Iran have rocketed. According to official Turkish trade data, nearly $2 billion in gold was sent to Dubai in August on behalf of Iranian buyers.