Most people keep their nitrates between 20-40 ppm. From my reading, rainbows don't seem particularly sensitive to nitrates, so this range should be fine. You were right to do a water change when the nitrates reached 60 ppm, though.
The color fade may have been stress, due to the higher nitrates. Some fish also fade a bit at night as a defense mechanism - to hide from predators. He should be fine tomorrow.
What do you think is the cause of your higher nitrates? Some possible causes are overfeeding, or an overstocked tank, or skipping a water change.