Balogun’s current contract runs out at the end of this season and he is attracting interest from several clubs in England and the rest of Europe.
Arteta wants to keep the 19-year-old forward, who impressed again on Thursday when he came off the bench against Dundalk in the Gunners’ 4-2 win.
Balogun setup a goal for Joe Willock and scored one of his own in his 30-minute cameo and Arteta wants him to stay at Arsenal.
“He has done really well. Every minute that he has been on that field he has been superb,” said Arteta.
“Today he looked a threat again. He scored a goal, he setup another one and he looked really lively and mature on that pitch.
“We are having some [contract] discussions with the player. He knows that we want to retain him at the club.
“We know the length of his contract at the moment is an issue, but we are trying to resolve it in the best possible way.
“We want him to stay. He said to me he wants to stay at the club.
“So hopefully we can reach an agreement and extend his contract.”