The explosive winger has struggled to replicate the form of last season, partly due to a contract dispute with the club.
City, the Reds and Leeds are the three teams with a big interest in Traore.
But according to Leeds Live, such a move is "pure fantasy."
Wolves want roughly £35.5 million for the player, who has also been linked to Barcelona in the past.
Traore has zero goals and one assist in 18 Premier League appearances this term.