At a press conference about the 23-year-old England international’s condition, Arteta said it is not looking good, adding that he will be out for many weeks.
Saka was filmed leaving Selhurst Park on crutches on Saturday, souring a comprehensive second win over the Eagles in four days.
He also revealed that Raheem Sterling had injured his knee and would be out for many weeks.
When asked if there were fears Saka would not return before the end of the season, Arteta said there is no fear, saying he is very optimistic Saka will be back before the end of the season.
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The Spaniard said it was part of the development of a player.
Saka is a crucial cog in Arsenal’s attack, scoring five Premier League goals and providing 10 assists this season, and his absence will be keenly felt.
Arteta further said he was putting some ideas together about how to cope in the winger’s absence.
Arsenal, who have finished as Premier League runners-up over the past two seasons, host relegation-threatened Ipswich on Friday.
The Gunners are third in the Premier League table, six points behind leaders Liverpool having played a game more.