Island's gold located in capsized vessel (5)
I believe the answer is:
nauru
'island's' is the definition.
(island nation)
'gold located in capsized vessel' is the wordplay.
'gold' becomes 'Au' (Au is the chemical symbol for gold).
'located in' is an insertion indicator.
'capsized' says the letters should be written in reverse (in a down clue, the word turns upside down).
'vessel' becomes 'urn' (urn is a type of container).
'urn' in reverse letter order is 'nru'.
'au' placed inside 'nru' is 'NAURU'.
(Other definitions for nauru that I've seen before include "little nation" , "Small Pacific republic" , "Fairground carousel" , "Island country in Micronesia" , "Pacific island country" .)