Go back to the original "handle" layer. Make a narrow selection as shown, right click and select layer via copy.
Resize the layer (while depressing Shift and Alt) to a size significantly taller than the handle on both sides.

Set the following layer styles to the handle layer:

Drop shadow: Default settings
Inner Glow: Blend mode Normal, Opacity 75, Color #000000, Choke 20, Size 9

Next, adjust the curves on the handle layer to look close to this.

Your final result should look something like this.
Now you shouldn't stop at this, you can add many details, work on the highlights and dark areas to give the metal a more realistic look, etc...
You can add rust, blood, whatever you like.

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