A nanocomposite, composed of a magnetic iron-oxide dispersed in a silver matrix was synthesized by inert gas condensation combined with in situ oxidation and compaction. It was found that the composite exhibits superparamagnetism and that a post annealing treatment modifies the moments and saturation magnetization. The iron oxide phase giving rise to the magnetism was investigated by Mossbauer and X-ray absorption spectroscopies. The magnetic species was identified as gamma-Fe2O3 after the post annealing treatments, whilst Fe and Fe3O4 coexist in the as-prepared loose powder and the as-compacted pellet.