The sword of Godric Gryffindor is an example of goblin-made armour, and specifically was made by Ragnuk the First; according to Griphook, it is a masterpiece of goblinwork (DH25). It is described as “silver” with a handle “gleaming with rubies the size of eggs”, and has Gryffindor’s name engraved on it just below the hilt (CS17, CS18). It is currently kept in the Head’s office at Hogwarts (GF30). A true, worthy Gryffindor is capable of pulling the sword from the Sorting Hat (which also once belonged to Gryffindor) (CS18).
The sword was produced by the Sorting Hat during Harry’s ordeal in the Chamber of Secrets and Harry used it to kill the Basilisk (CS17). At this point it became infused with Basilisk venom, which made it capable of destroying Horcruxes (DH15). Albus Dumbledore later used it to destroy the ring Horcrux (DH33) and, after Snape placed it in the bottom of a forest lake for Harry to find, Ron used it to destroy the locket Horcrux (DH19). The Sorting Hat produced the sword for Neville Longbottom and he used it to destroy the last Horcrux, Nagini (DH36).
Ginny, Neville and Luna attempted to steal the sword from the Head’s office while Harry, Ron and Hermione were searching for the Horcruxes; however, even if they had succeeded they would only have stolen a fake replica (DH15).
The Sword of Gryffindor was crafted by Ragnuk the First a thousand years ago out of purest silver and huge rubies. It is enchanted in ways only goblin-made armor can be. After delivering the sword to Gryffindor, Ragnuk conspired to steal it back from its rightful owner. He spread the lie that Gryffindor had stolen the sword and sent goblins to steal it back. However, Gryffindor used his wand to defend himself and sent the minions back to their king with a dire warning of what would happen if he tried to steal the sword again (Pm).
Rowling on the connections with legendary swords:
There have been many enchanted swords in folklore. The Sword of Nuadu, part of the
four legendary treasures of Tuatha Dé Danann, was invincible when drawn. Gryffindor’s
sword owes something to the legend of Excalibur, the sword of King Arthur, which in
some legends must be drawn from a stone by the rightful king. The idea of fitness to
carry the sword is echoed in the sword of Gryffindor’s return to worthy members of its
true owner’s house. (Pm)
Dumbledore tells Snape the sword "must be taken under conditions of need and valour" (DH33) - this seems like the same sort of magic only allowing the sword to be taken from the Hat by a true Gryffindor, in times of need. It also echoes the magic of the Room of Requirement. I've often wondered what would have happened if Harry had not taken it in these conditions. --RP