There are reasons for a couple currencies, but yes, most games take it to an extreme. Each mini-faction (reputation factions, likes WoW's) doesn't need its own currency.
But you don't want to allow players to just farm low level stuff -> sell on the AH -> amass gold and obtain real ultimate power by simply buying end game gear. Yeah, it is tedious to do it, but people do. More particularly, they also sell that gold for actual money to other people so they can buy the good stuff with no effort at all.
Gold is (or should be) the currency for interacting with peasants, merchants and low level players. Towns and cities can function on gold, and it makes sense when you need to interact with such things. As characters get more powerful, that stuff becomes less important (and the pile of gold you get from the latest adventure can buy the inn, but the innkeeper can't make change for your dinner). So you need something else to buy pay the enchanters and master craftsmen that you need to do custom jobs of unimaginable artisanship. Luckily ES already has that built in: soul gems, wanted and desired by enchanters and daedra alike.