Why are satellites covered with gold coloured foil?

Satellites in orbit generate heat during its normal operation. Of the three major ways of losing heat ---  conduction, convection, and radiation, only the  radiation works in the vacuum of space. This means that, even though space is cold, the problem is cooling, not heating. Using the gold foil to keep the heat from the Sun off the satellite means a lot head to manage. The gold foil reflects infrared light,  so keeps the satellite from overheating in the sunlight.

Multi layer insulation materials consist of lightweight reflective films assembled in many thin layers. These layers are typically made of polyimide and polyester films, that are vapor deposited with 99.99% aluminum. The multilayer films assist in the material's heat management by reducing emittance with each layer. As it is very difficult to design an MLI insulation blanket that reflects 100% of incident radiation, a multilayer film design can range from a few simple layers to a complex array of blankets that completely surround the spacecraft and many of its external components. The designs of these layers typically reflect 95% of radiation back away from the Spacecraft. The total effect by the time the radiation energy makes its way to the innermost layers is, effectively, a 100% reflective barrier.