With oil prices under significant duress and the Dollar showing at least temporary signs of strength, the action in the gold market on Thursday was pretty impressive. In fact, with the tight correlation between gold and oil and the inverse relationship between gold and the Dollar over the last several weeks, few traders would have expected gold to hold together in the face of the outside market action Thursday. In fact, given the recent extreme concentration on flight to quality issues, it is really surprising to see gold avoid big gains in the face of a moderately significant improvement in the US economic outlook. Perhaps the gold trade thinks that a recovery in the US economy is really the quickest way to see a true ignition in inflation, as the threat of too much slowing (stagflation) seemed to be behind the reversal in gold early in the week.