Geologists have discovered a large gold deposit worth a potential $6.46 billion in Northwest China's Xinjiang Uyghur Autonomous Region, local officials said on Tuesday.

With at least 127 tons of proven reserves, it is the largest gold deposit ever discovered in the resource-rich Xinjiang.

The gold deposit is located in Uqar county, which borders Kyrgyzstan in west Xinjiang, according to the regional bureau of geology and mineral exploration and development.

"It's expected the total reserves will exceed 200 tons," said Cui Hongbin, head of the exploration team.

The discovery will not only increase China's gold output, which totaled 211.07 tons in the first half of this year, but will also benefit local revenue and employment, said Cui.

The bureau spent two decades exploring the area, where geological workers found more than 20 belts of gold ore in the 20-square-kilometer Sawayaerdun deposit, he said.

The discovery has attracted the attention of several major mine developers in China who have expressed interest in co-development.

However, China's gold demand has slackened this year as a 28 percent tumble in gold prices for 2013, which was the first annual decline in 13 years, dented consumer confidence in the metal as an investment tool.

The country's gold demand stood at 569.45 tons in the first half of 2014, compared with 706.36 tons in the same period last year, data from the China Gold Association showed last week.