Reports have linked Morata with a loan move to the Gunners during the January transfer market.
The 21-year-old has made just one start in La Liga for Real Madrid this season.
“I say, some clubs are interested but the subject is closed,” Ancelotti told Spanish radio station Esradio.
“Morata remains with us because we need a footballer like him at Real Madrid this season.
“Although he has not played many matches this season I have confidence in his work for the team.”
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