Xhaka, 23, flew to London on Friday to undergo a medical and agree personal terms with the Gunners, with both sides eager to get the deal done before Xhaka joins the Switzerland squad for the European Championship.
Photos emerged on social media on Saturday of Xhaka posing in a full match kit at the indoor training facility at London Colney.
Arsenal would not confirm the authenticity of the photos, which also showed the midfielder holding up an Arsenal shirt and standing outside the training facility.
But a source told ESPN FC the deal was close to being finalised and that the club hoped to announce the signing as soon it was completed.
Arsenal have been in talks with Gladbach for weeks after manager Arsene Wenger made powerful central midfielder Xhaka one of his top targets.
Gladbach sporting director Max Eberl confirmed earlier this week that the German club had received an offer for Xhaka, but declined to name the interested party and insisted no agreement had yet been reached.
Xhaka has impressed for club and country in recent years, and revealed that he wanted to resolve his future before representing Switzerland at Euro 2016.
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