For starters, a golden sword does not do more damage than a Diamond sword. Nor does a golden pick mine faster than a diamond pick. Gold is more common than diamonds, and does not have very many practical uses in vanilla minecraft, save for a handful of recipes. Golden tools are usually the last resort to consume the resource. Being more common than diamond (though barely), gold is obviously more plentiful than the former. However, because of how quickly the tools degrade, you would actually need more gold to achieve the same quantity of effect as you would diamonds, and the supply outweighs the player's demand greatly.
tl;dr: Diamond is better for practicality. Gold is an aesthetic tool. Enchantments, obviously, could change this, but I'm going by its raw state.
Private Mod Note
Rollback Post to RevisionRollBack
The world is full of magical things, patiently waiting for our senses to grow sharper.
Gold tools as a rule are faster than diamond, however far less durable. Think instead of 1000 uses for diamond, only 50 for gold.
Gold swords are not good and should not be made.
Gold armor is in between leather and iron armor.
That should be all.