In this book, the first principle studies on the ground state structure, binding energy, and magnetic moment of gold-coated Fen, bare Fen, and their oxides, FenO2 have been carried out within a density functional formalism. The first systematic theoretical study of gold-coated iron nanoclusters, aiming at understanding the magnetic properties of this core-shell structure used in biomedical applications. The calculations based on density-functional theory focus on the effect of gold coating on the magnetic and structural properties of iron clusters of various sizes, and the reaction of the bare iron clusters with oxygen. My results show that the magnetic moment of iron nanocore with gold coating is still significantly higher than that in bulk Fe; the coupling between Fe atoms remained ferromagnetic. The improved chemical stability by gold coating prevents the iron core from oxidation as well as the coalescence and formation of thromboses in the body. Thus, it is shown that gold coating is very promising for the magnetic particles to be functionalized for targeted drug delivery.