The Gunners are understood to be demanding a fee of £35million for Sanchez, with the 29-year-old forward out of contract at the Emirates at the end of the 2017/18 campaign.
City failed with a £60million move for Sanchez last summer and Pep Guardiola is determined to bring the Chile international to the Etihad before the January transfer window slams shut.
Goal suggests Arsenal and City have held advanced negotiations since Friday and Sanchez’s entourage are hopeful that a deal will be wrapped up imminently.
The Premier League leaders are confident of signing the Chilean for a fee of £25m despite Arsenal’s £35m asking price.
It’s claimed Sanchez is ‘desperate’ for official confirmation following months of speculation regarding his future.
The ex- Barcelona star was absent as Arsenal were defeated 4-2 at Nottingham Forest on Sunday afternoon meaning he would be available for City in the FA Cup should a move take place.
Asked about Sanchez at the end of December, Guardiola said: ‘He is a player from Arsenal and I think he is going to stay at Arsenal.
‘Now it is just about recovering from today. Sometimes you ask for that, but I have a lot of things in my mind.
‘In two days, we have another game. In terms of what happens, we will have meetings and see what is best. But my feeling now is Alexis is an Arsenal player.’