We measured the magnetic linear dichroism in the angular distribution (MLDAD) of photoemission of thin Gd layers on Fe(100). At low photon energies large MLDAD asymmetries, up to 40%, in the $\mathrm{Gd}4f$ photoemission were observed. The line shape and the photon-energy dependence of the measured MLDAD are in good agreement with theoretical results. Analysis of the $\mathrm{Gd}4f$ and $\mathrm{Fe}3p$ magnetic signals indicates an antiferromagnetic coupling between Gd and Fe, confirming previous findings. We also demonstrate that the MLDAD plus-minus feature is governed by the orbital magnetic moment of the core hole state.