The highly rated forward has emerged as one of the most sought-after young players in European football, but his next step appears to be taking him to the Bernabéu.
According to Marca, Gabriel is already training in Madrid while the two sides work towards completing the transfer. The report, citing journalist Ben Fernandes Santos, suggests the coming days could prove decisive in finalising the move.
Barcelona had also expressed an interest in the teenager, but are now understood to have withdrawn from the pursuit, believing Gabriel has decided to continue his development at Real Madrid.
Gabriel, who recently turned 16, had asked to leave Manchester United after making a significant impression in the club's youth ranks. He has attracted attention for his performances at an unusually young age and has been regarded as one of the most exciting prospects in English football.
His profile has also extended beyond the pitch. Gabriel signed a sponsorship agreement with Nike at the age of 14, with *Marca* reporting that the deal was worth more than the agreement Neymar had secured at the same age.
The youngster's departure would represent a significant loss for United, who had hoped to retain a player attracting interest from several leading European clubs.
Barcelona, Real Madrid, Bayern Munich and Paris Saint-Germain had all been linked with Gabriel during the autumn. However, the latest report indicates that the Spanish capital is now his preferred destination.
There has been no official confirmation of an agreement from either club, and the precise terms of any deal have not been disclosed.
Gabriel's situation has developed quickly since he and his family requested a move away from Old Trafford. Real Madrid now appear to be in a strong position to secure his signature, with the final details still to be settled.