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Several characters in J. R.. R. Tolkien's novel The Hobbit use magic.
Sauron imbues the one ring with magic. Although we don't find out much about Sauron until The Lord of the Rings, Gollum and Bilbo both use the magic of the ring to make themselves invisible.
Beorn: Can turn into a bear.
Elrond: is half-elf half-human and can use elven magic. As we find out in The Lord of the Rings, he wields one of the 3 rings.
Elves can all use small amounts of elven magic.
Gandalf is an extremely powerful wizard who uses his own magic as well as immense knowledge. He also wields a magical sword.
King of the Wood Elves: Can use elven magic.
Smaug: Dragons are semi-magical creatures.
He wanted it because it was a ring of power, and if you slipped that ring
on your finger, you were invisible; only in the full sunlight could you be seen,
and then only by your shadow, and that would be shaky and faint.
Gandalf the Grey: Surely you don't disbelieve the prophecies because you helped bring them about?
We must away ere break of day
To seek the pale enchanted gold.
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