The magnetic characteristics of the dilute magnetic system GaGdN are investigated mainly by soft-X-ray magnetic circular dichroism (MCD) in the energy range of 1160-1240 eV. The strong MCD signals up to 30 % at 15K are observed. The temperature dependence of the signal intensity is not on a simple Curie-Weiss curve but depicts a three-step curve. A step around 40-100K suggests a new magnetic phase. The luminescence spectrum of GaGdN at low temperature is divided into three parts consisting of two broad bands around 432 nm and 503 nm and a sharp peak at 652 nm. This sharp line is assigned to the intra-transition of the f-f orbital owing to the weak temperature dependence of the intensity and the peak position. AlGdN grown by molecular beam epitaxy produces luminescence at 318.5 nm. X-ray absorption fine structure is examined to survey the occupancy of the Gd ion in the grown specimens.