Hydrogen gas' reducing property
Iron on reaction with HCl forms Fe(II) salts and not Fe(III) salts because even if Fe(+3) is formed, as we can see in electrochemical series Fe(+2) will be favoured ie. H2 which gets can reduce Fe(+3) to Fe(+2). So thermodynamically Fe(+2) salt is favoured. If you want to make Fe(+3) salt then you can react Fe and Cl2 directly.


  How H2 gets its reducing property?


H2 gas will react with FeCl3 to form FeCl2 and HCl. I don't know the exact mechanism but it can be explained well on the basis thermodynamic data available.