The Aura of Malice Gem is an essence gem which grants bonuses to Body and Intimidation. It is exclusive to followers of the Way of the Closed Fist, but another gem, the Aura of Calm Gem, can provide the same bonuses to a follower of the Way of the Open Palm.
It is obtained by defeating Gao the Lesser as part of the quest The Search for Dawn Star.
In-game description: "Legends tell of bandits and warlords so evil that their mere presence in a room could cow people into submission. This gem is part of that legend. It allows the wielder to project an aura of such malice that a victim is to do his will."