A facile and green method has been developed to synthesize gold nanoparticles using a novel reducing agent 2,3-dihydroxyfumaric acid (DHFA). PVP stabilized gold nanoparticles show excellent catalytic activity for controlled and complete aerial oxidation of hydroxybenzylalcohols to hydroxybenzaldehydes. Uncapped gold nanoparticles are ferromagnetic in nature at room temperature. (C) 2011 Elsevier B. V. All rights reserved.