Spanish newspaper Marca says City are eager to strengthen their midfield further in January with Gago, despite signing Patrick Vieira earlier this month.
Gago’s agent, Marcelo Lombilla, is set for talks with Real Madrid president Florentino Perez and club director Jorge Valdano about his client’s future at the club.
The Argentine has alos been linked with Everton and his former club Boca Juniors.