Gundogan has been heavily linked with a move away from the Bundesliga club, with his agent indicating that Spanish giants Real Madrid have shown a strong interest in the player's services.
The Germany international, who is expected to return from a back injury when the Bundesliga season resumes next month, has yet to renew his current Dortmund contract, which expires in June 2015.
And, while Watzke is unsure whether Gundogan will remain at Signal Iduna Park, he does not expect to be kept waiting by the 23-year-old midfielder.
"We are talking to Gundogan's family, who act as his advisors," Watzke told Suddeutsche Zeitung.
"Obviously, we want to keep Ilkay but there is no agreement so far. At the end of the day, only he can decide whether he wants to continue his development with us.
"He knows, though, that we expect a decision from him soon."
During the last transfer window, Dortmund prevented striker Robert Lewandowski from leaving to join rivals Bayern Munich.
The Poland international is widely expected to make the move to Bavaria at the end of this campaign, but Watzke insists that the club did the right thing by hanging on to the 25-year-old.
"It was absolutely right," he added. "He (Lewandowski) scores important goals for us, works incredibly hard and is a player we couldn't have replaced in the summer, with our financial capabilities.
"To my knowledge, he wants to go to Bayern Munich. We're scanning the market closely (but) you can't buy a straight replacement for a special player like Robert.
"Incidentally, we have (Marco) Reus and (Pierre-Emerick) Aubameyang, who both played as strikers at their old clubs."
