Alvarez found himself in a bizarre situation at the weekend as he was jeered by his own supporters.
It comes with the player keen to make the switch to Barca, while Atletico do not want to sell him to a direct Spanish rival.
Barcelona have not totally given up despite no indication that Atleti are ready to cave in.
It is expected that new talks will open up, and Barca may have been handed some encouragement by the scenes at the weekend.
Alvarez made his first appearance of the season in Atletico Madrid's 2-2 draw with Villarreal on Sunday.
His name was loudly whistled by supporters when it was announced before kick-off, before he was jeered again when introduced as a 66th-minute substitute.
At the final whistle, Alvarez was seen walking away from the pitch while his teammates remained behind to applaud the fans.
The situation has clearly hit a new low, with the tension now being played out in public.
Arsenal remain very interested in how the situation develops.
They know they are not Alvarez's preferred destination, but if a move to Barcelona cannot be unlocked and he does not want to remain at Atleti, Arsenal are adamant they have the funds to convince both club and player to agree a deal for his return to the Premier League.
Arsenal began their title defence with a win over Coventry City on Friday, but remain keen to add another forward before the transfer deadline.
Dean Jones is a transfer news and football insider for Flashscore, since 2025. He has been a journalist on leading UK newspapers and websites over the past 20 years, establishing himself as an authoritative and trusted voice in the industry.
