When you press the attack key when an enemy is at close range, the weapon's glove will emit golden sparkles in the air, freezing your enemies helplessly for a limited amount of time.
The weapon seems to named and based off of Midas, who can turn anything into gold, and freezing them, though the Midas' Golden Grasp doesn't turn anything in to gold, and the effects are not permanent.
Concept art of this weapon exists.
It looks like the Golden Grasp was worked on much further, unlike the other cut weapons. in Daikatana’s 1998 prototype (Also known as the v.10 prototype), the Golden Grasp is a usable weapon.
..But, the gun is entirely lacking most of the weapon’s functions from the pre-alpha, including the freezing effect. It also can’t be picked up and found in the prototype Greek levels, only able to be given to the player via console commands, which hints that the weapon was quite buggy and had some problems, or it just wasn't implemented.
It uses a model that's similar to the Discus of Daedalus’ pre-alpha model, but much more higher quality than the pre-alpha Discus model, and it’s texture is better than the pre-alpha Discus, and the Golden Grasp now no longer uses it’s pre-alpha model. Daikatana’s final version also holds the same model of the Golden Grasp.
Combining all of this, It seems that the gun would fire a disk like the Discus of Daedalus, and if it hits a enemy, freezes them for a limited amount of time, instead of having the player get close to a enemy to freeze them temporarily in the Grasp’s pre-alpha appearance. It’s also possible that the weapon a super-weapon, just like the Eye of Zeus, as they both have a unique function, but the Golden Grasp is broken.
In Daikatana’s MPlayer demo, In one of the .dll extensions, apparently the Golden Grasp would use a unique ammo pool, called “ammo_pyrite" according to the .dll file. Probably this is a question why the gun doesn’t work, as the Pyrite ammo can’t seem to be found in the prototype Greek levels.
It was cut for unknown reasons.
Just like it’s pre-alpha appearance, after it was cut, the Golden Grasp doesn’t appear after that.