For background, I was on a tour coming back from Ballestas Islands just off of Peru, around 11:00 a.m., no rain (it’s a desert area), sky was partly cloudy. The phenomenon stayed a couple of minutes. As we progressed, the colours merged to a strand of amber.


You are correct! I think the use of the word “diffraction” is a bit confusing because “diffraction patterns” are an interference effect.
So is this any different than a rainbow? The path of light must be at least different since rainbows only occur in the opposite direction of the Sun.
No it’s the same effect. Suspended water particulate refracting sunlight.