The Gunners lost 3-1 to Barcelona at Camp Nou on Tuesday night in their Champions League last-16 clash.
Arsenal have failed to win their last two Premier League games following defeats by Manchester United and Swansea City.
The Gunners will need to beat the Toffees to have any hope of catching Premier League leaders Leicester City, who are 11 points ahead of Arsene Wenger’s side in the title race.
However, former Everton forward Gray doesn’t believe that the north Londoners will return to winning ways against Roberto Martinez’s side at Goodison Park.
“I think this is very close. If you go by form, Everton will have this in the bag. They were so impressive against Chelsea last week,” Gray told Paddy Power’s blog.
“Arsenal need to play better than they did against Watford and Barcelona over the last week. They know if they lose, then their title challenge is well and truly over. They need to win every game they have left.
“Everton’s home form is poor, but I fancy them in this match. Players like Lukaku and Deulofeu are coming into form now.”
Arsenal have not won the Premier League under manager Wenger since their famous unbeaten triumph in the 2003-04 season.
The Gunners were dumped out of the FA Cup last weekend after a 2-1 defeat by Watord at the Emirates Stadium.
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