Water-soluble gold nanoparticles (AuNP) stabilized with cavitands having carboxylic acid groups have been synthesized and characterized by a variety of techniques. Apparently, the COOH groups similar to thiol are able to prevent aggregation of AuNP. These AuNP were stable either as solids or in aqueous solution. Most importantly, these cavitand functionalized AuNP were able to include organic guest molecules in their cavities in aqueous solution. Just like free cavitands (e.g., octa acid), cavitand functionalized AuNP includes guests such as 4,4'-dimethylbenzil and coumarin-1 through capsule formation. The exact structure of the capsular assembly is not known at this stage. Upon excitation there is communication between the excited guest present in the capsule and gold atoms and this results in quenching of phosphorescence from 4,4'-dimethylbenzil and fluorescence from coumarin-1.