Capital idiot wears new gold (6)
I believe the answer is:
nassau
'capital' is the definition.
(Nassau is an example)
'idiot wears new gold' is the wordplay.
'idiot' becomes 'ass' (I've seen this before**).
'wears' is an insertion indicator.
'new' becomes 'n'.
'gold' becomes 'au' (Au is the chemical symbol for gold).
'n'+'au'='nau'
'ass' going into 'nau' is 'NASSAU'.
(Other definitions for nassau that I've seen before include "city" , "Capital of the Bahamas" , "Caribbean resort" , "Bahamas cap." , "Saunas (anag)" .)