Dubai gold dealers shun Turkish bars on fears of link to Iran
* Most dealers in Dubai's gold souk shun Turkish gold
* Banks irked due to Turkey's booming gold trade with Iran
* Traders in Dubai edgy over possible local government probe
By Humeyra Pamuk
DUBAI, Jan 30 (Reuters) - Trade in Turkish gold bars to Iran via Dubai is drying up as a growing number of banks and dealers refuse to buy the bullion to avoid the risks associated with Turkey's gold-for-gas trade with Iran.
U.S. officials say they are concerned the trade between the two countries provides a financial lifeline to the Iran, which is largely frozen out of the global banking system by Western sanctions.
The U.S. State Department said in December that diplomats were in talks with Ankara over the flow of gold to Iran after the Senate approved expanded sanctions on trade with Iran's energy and shipping sectors, which would also restrict trade in precious metals.
That increasing U.S. pressure has already started to create troublesome repercussions for exporters of Turkish gold.
Many dealers in Dubai's crowded and boisterous gold souk now refuse to take gold bars produced in Turkey. Some ask for a deep discount, saying their clients such as banks and other traders had suspended dealing with Turkish bullion over the past couple of months. Continued...