Took a little looking but …
xattr -w -x com.apple.FinderInfo "0000000000000000000E00000000000000000000000000000000000000000000" /filetochange
The 0E in that string is the Colour
0C = Red
0E = Orange
0A = Yellow
04 = Green
08 = Blue
06 = Purple
02 = Gray
Note for 10.6 and higher
If you need to do this on an OS before 10.6 then use this setlabel app. It’s PPC but works fine on Intel Macs too, Just have rosetta installed