The golden sword is a key item in Drakan: The Ancients' Gates. It is one of four items that Rynn must collect in order for Zeggoro to dispel the magic barrier blocking access to the land of Shiverbane.
The sword is an heirloom of the Northmen captain, Serris, handed down to him from his grandfather. It is utterly useless as a weapon, as it is made entirely of gold (a very soft metal) and is very, very heavy. Rynn acquires it by agreeing to recover a pair of magical gauntlets a wartok was using to become invisible and rob the Northmen blind.
Drakan: Order of the Flame - Drakan: The Ancients' Gates