The Hornets midfielder joined UAE Arabian Gulf League side Al-Nasr on a season-long loan back in October, but with the option to bring him back in January.
Zarate has also been attracting interest from his boyhood club in Argentina, Velez Sarsfield, but Hornets boss Marco Silva played down the speculation.
“One chance we have in January," he said. “We will make the decision we think is best for us as a team, we will see.
“Mauro had a good start last season, when he came in last January, but he had a big injury which stopped his involvement and stopped his football.
“He had some problems in the beginning of the season with the pace and the intensity, but that is normal after six or seven months out.
“He took the decision to get more game time and play more games in a row at the other club, so we will see what our decision is.
“He is out player, of course, and we will make the best decision for us."
Ndong started 15 of Sunderland's first 16 Championship games after impressing at times last season, one of few players at the Stadium of Light to do so as they were relegated from the Premier League.
Injuries have kept him out of the team for much of the past two months, though, and he's only made two substitute appearances since the last international break in November.
Reports, however, suggest the Hornets are interested in signing the 23-year-old with a fee of £10m being mentioned, says the Watford Observer.