Alvarez shocked the LaLiga giants during the 2026 FIFA World Cup, as he publicly declared his desire to move on, with rivals Barcelona the preferred destination for the Argentina international.
However, amid a furious war of words between the two Spanish giants, Atletico refused to sell to Barca and Alvarez was unconvinced on a move back to the Premier League.
Arsenal's interest in the former Manchester City forward has not gone away and Mikel Arteta is open to making a bold bid in January.
The club are willing to make funds available, with Los Rojblancos ready to demand around £120M, and Arteta will need to make at least one sale to part fund the deal.
As per reports from TEAMtalk, that could be Viktor Gyokeres, after a mixed year for the Swede in North London following his £45M move from Sporting Lisbon.
Gyokeres ended the campaign with 21 goals across all competitions, but he remains behind Kai Havertz as a first choice pick, and that could impact the Gunners desire to keep him with offers in the region of £64M potentially enough to prise him away.