Aharonov-Bohm (AB) caging, a special flat-band localization mechanism, has spurred great interest in different areas of physics. AB caging can be harnessed to explore the rich and exotic physics of quantum transport in flatband systems, where geometric frustration, disorder and correlations act in a synergetic and distinct way than in ordinary dispersive band systems. In contrast to the ordinary Anderson localization, where disorder induces localization and prevents transport, in flat band systems disorder can induce mobility, a phenomenon dubbed inverse Anderson transition. Here, we report on the experimental realization of the AB cage using a synthetic lattice in the momentum space of ultracold atoms with tailored gauge fields, demonstrate the geometric localization due to the flat band and the inverse Anderson transition when correlated binary disorder is added to the system. Our experimental platform in a many-body environment provides a fashiinating quantum simulator where the interplay between engineered gauge fields, localization, and topological properties of flat band systems can be finely explored