Xhaka's discipline has been the main bone of contention for many Arsenal fans, with the former Basel man having been sent-off twice while he has been booked in each of his last five matches.
Despite that, Hitzfeld admits that Xhaka is a player that continues to be on the radar of Bayern, hinting he could yet be a transfer target for Carlo Ancelotti's side.
"Bayern certainly has Xhaka on the radar," he told SportBild.
"Xhaka is always a topic of conversation for current top clubs and his development is not yet completed."
Bayern could be in the market for a central midfielder this summer following Xabi Alonso's announcement this week that he was retiring, though they do currently have Renato Sanches and Joshua Kimmich in reserve.