I agree that we need more info from OP to assess what really happened here. In particular, was the upgrade on the "long-haul" flight a sticker upgrade or an instrument upgrade? And if it was an instrument upgrade, had the ticket been reissued?

If it was a sticker upgrade, IME auto rebook tends to protect you up front if possible (though my last experience on this was over a year ago). As I posited in another thread, auto rebook only looks at your most recent seat/cabin assignment and seeks to rebook in that same cabin. However, if one were to go about getting an agent to do a second, manual rebook, then others are correct that the pax would be downgraded and re-listed for the upgrade.

If it was an instrument upgrade, it seems to depend on whether the ticket had been reissued after the upgrade had cleared, as I learned in another thread. AA's IRROPS protection policy says to "protect in ticketed cabin" or something along those lines; there have been reports of situations where an upgrade cleared but the underlying ticket was never reissued (due to being stuck in ticketing queue or, apparently, having the upgrade clear at the gate), IRROPS happened, and folks were rebooked into Y because the ticketed cabin was still Y. Now, if the OP had cleared the upgrade and reissued the ticket into C, then no question s/he should've been protected up front. It shouldn't matter that OP is "only a GLD" and on an upgrade; a C ticket is a premium cabin ticket, and is entitled to first come first served, positive space rebooking, regardless of C/J/F availability on the new flight and the potential for other higher status/fare customers needing that space.