The most common and most likely answer to this crossword clue is the 7 letter word GOGGLED
I've seen this crossword clue in The Daily Telegraph
G
O
G
G
L
E
D
Buddy explains!

The straight part
We know that "Watched with amazement" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case watched with amazement = goggled.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does GOGGLED mean?
GOGGLED verb- To stare (at something) with wide eyes.
- To roll the eyes.
- Wearing goggles.
- Prominent; staring