Heating steel creates an oxide layer, and microscopic variations in thickness of that layer reflect different wavelengths (colours) of light, leading to the rainbow of colours. You can see a similar effect in oil on a floor, or the surface of a soap bubble.
If you want to know more, plus other weird and wonderful features of the quantum world, I highly recommend [Q.E.D. The Strange Theory of Light and Matter by Richard Feynman](https://www.goodreads.com/book/show/5552.QED?from_search=true&from_srp=true&qid=BlfE7PIkFA&rank=1).
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