ENDS 'GAS FOR GOLD'
The package includes measures designed to stop the flow of gold from Turkey to Iran, said Mark Dubowitz, the head of the Foundation for Defense of Democracies.
Ankara relies on natural gas from Iran and has been paying for it using lira. Banking sanctions make it difficult for Iran to transfer money.
Tehran has used the lira to buy Turkish gold. Couriers carry the gold to Dubai and from there it is shipped to Iran.
Turkish Energy Minister Taner Yildiz said earlier on Thursday he was not worried about a "clash with the USA" over the trade. "We are talking with the USA," he said.
The new sanctions would allow purchases of natural gas from Iran only if the buyer holds the payment in an account that Iran can draw on to buy goods or services allowed under the law.
But the draft bill would also explicitly ban sales and transfers of precious metals to Iran.
"After giving Turkey this flexibility, Congress will not be sympathetic to a continuation of a 'gold for gas' scheme," said Dubowitz, who has pushed for stronger sanctions on Iran.
Obama issued an executive order at the end of July authorizing sanctions on anyone who helps the Iranian government acquire U.S. dollars or precious metals, including gold.
"We can't comment on any investigations that may be ongoing," an administration official said.