In this paper, we show that when nanoparticles of Fe3O 4 are coated with gold there is a distinct enhancement of magnetization by a factor of six. This increase of magnetization has been attributed to large orbital magnetic moment formation at the magnetic particle/Au (core/shell) interface. Our theoretical analysis indicates that the enhanced magnetism observed in Fe3O4-Au (core-shell) nanoparticles is an interfacial effect. The origin of magnetism in Au as an interfacial phenomenon is supported by the observation of positive magnetization in citrate coated gold nanoparticles. In citrate coated gold nanoparticles, we observe a crossover from positive magnetization value to negative magnetization value upon increasing magnetic field indicating cancellation of interfacial magnetization by the diamagnetic contribution from the bulk. We propose a theoretical formalism which semi-quantitatively explains our experimental results and supports the origin of magnetization in Au as an interfacial effect. © 2011 American Institute of Physics.