China ended years of speculation about its official gold holdings by revealing an almost 60 percent jump in its reserves since 2009.
The country's central bank said its gold reserves were 1,658 tonnes (53.31 million fine troy ounces) as of the end of June. In April 2009, reserves were 1,054 tonnes.
The purchases show how China is seeking to diversify its reserves away from the US dollar at a time when the price of gold has fallen to near its lowest price since 2010.
But that task has been complicated by the rapid growth in China's foreign exchange reserves, which are the world's largest at over $3 trillion.
At a value of $60.9 billion based on today's prices China's gold reserves only make up 1.6 per cent of its total foreign exchange holdings. The world average was just under 10 per cent at the end of 2014, according to Reuters GFMS.
China has been reducing its foreign exchange reserves this year, reporting $3.69tn at the end of June, down from $3.84tn in January.
"Gold has special risk-return characteristic, and at specific times is not a bad investment," the People's Bank of China said on its website.
"But the capacity of the gold market is small compared with China's foreign exchange reserves, if foreign exchange reserves were used to buy large amounts of gold in a short amount of time, it will easily affect the market."