The information in this article is from a fan game or fan fiction and is therefore not canon.
Fool's gold is a trick coin that appears to be made of gold but turns to ordinary metal the instant someone touches it. A Dwarf set up a trap using some of these coins as bait to lure unfortunate victims. Graham disabled the trap by cutting the rope with his sword and took the coins into his possession. Graham was able to distract a "merchant" by throwing them into the town's fountain (they changed back to yellow again the instant they left his hand) while he quickly retrieved the baby pumpkin.