When you reach the top of the Lofty Mountains, Jehk says Joch went northeast to the Gold Isle.
Get Access to the Palace
Call Flammie with the Flammie Drum, then fly northeast (more like north-northeast) from the Lofty Mountains. There is a big island that has a city with golden walls and sparkling golden houses. If you have trouble finding it, look at the map and look for the Ice Country in the north part of the map. The Gold Isle is south of the Ice Country.
On the Gold Isle, there is a Golden Tower to the north, but the king sealed it up. Go to the northwest corner of town and go up the stairs, then go the long way around the wall until you reach the far end. There is an old man up there who says that the key to the Golden Tower was stolen by a spy in Tasnica, but after the spy was caught, the key was never found. You might remember Mara from Sorthtown, the old lady whose husband was a spy who got caught by the Empire. Sound familiar? Fly Flammie to Southtown. It's east of the Gold Isle. Go north from where you land and go into the house to find Mara. Talk to her to get the Golden Tower Key. Then fly back to the Gold Isle.
Get New Equipment
In the northwest corner of the Gold Isle, there is an item shop. Buy three Lazuli Rings, three Battle Suits, two Duck Helms, and one Dragon Helm. You will most likely need to sell your old equipment before you are able to afford all of those things. It's possible that you won't be able to afford it all even then. Fight enemies somewhere to earn enough gold if necessary.
In the southwest corner of town, Watts has set up a shop. Talk to him to get your weapons upgraded. You should be able to upgrade the Javelin and the Gloves now. If not, you can get those orbs in the Palace of Darkness.
Enter the Palace
When you are ready, go into the Golden Tower, which contains the Palace of Light.