Cameron Diaz wore a diamond on her left ring finger this week, sparking rumors that she could be engaged to boyfriend Benji Madden.

Cameron Diaz, Benji Madden Engaged?

Diaz first showed off the new ring at the Academy’s Hollywood Costume luncheon on Wednesday. Inside the event, Diaz, 42, reportedly sat beside Gwyneth Paltrow and made the jewelry the center of attention. She was "casually and constantly twirling her ponytail, showing off the ring and often playing with it," a source told People.

The night of the luncheon, Diaz and Madden went out to dinner at Beverly Hills hotspot Madeo with a group of friends. "They arrived together with Benji driving. Cameron showed off her new ring and was smiling," another source said. "They enjoyed dinner for several hours."

Diaz and Madden, who have been dating for several months, have apparently already moved in together. "Since she started dating Benji, Cameron has changed in a very positive way. She can't stop smiling and seems much happier," an insider told People. "Benji has lived with Cameron for the past couple of months. They act like they can't get enough of each other and spend a lot of time together. During the days, they often share a workout. At night, they often stay at home and cook."

Diaz’s mom Billie is apparently hopeful that Madden is the one her daughter will ultimately walk down the aisle to and with whom she’ll start a family. "Billie has been gushing about Cameron's new relationship," a source told Us Weekly. "She absolutely loves Benji and she hopes this is the man her daughter will finally settle down with."