People make idle chitchat with strangers all the time at interactive events like auctions. Even if the old guy were more savvy than he let on, there is nothing rude about being competitive and ribbing others. Irritating and obnoxious, perhaps, but etiquette does not require us to march around like sanitized Stepford People.
In fact my 1963 edition of Amy Vanderbilt devotes five pages to auction etiquette; under "The Country Auction" which I assume this was, vs. a gallery / Sotheby's type thing, she notes: "The country auction, especially if it is held out of doors, is loud and boisterous, often intimate."
I don't want to quote too much for fear of running afoul of copyright rules but basically she says it's a show in which bidders interact with one another, make side deals etc.
No doubt it's galling to watch good stuff go to a self-congratulatory bigmouth but in the context of the event the old guy wasn't really incorrect.