Some Coloradans have noticed rainbow clouds over the past few days? This is actually a rare phenomenon called "cloud iridescence."

This happens when sunlight is diffracted off of tiny water droplets or ice crystals. These water droplets are smaller than a strand of your hair.
This can be compared to the colors that you see within a soap bubble or an oil slick.

There are a couple of things that need to happen in order to see cloud iridescence. Higher level clouds like altocumulous, cirrocumulus, lenticular and cirrus are the most common with this phenomenon. You will also usually see the bright colors where the cloud layer is the thinnest, like the edges.
This process is different than how a rainbow forms. With a rainbow, the sunlight has to be behind you and refracts from raindrops in front of you. Refraction and diffraction are two different processes.

It can also be hard to see cloud iridescence because the cloud is usually close to where the sun is in the sky.