The Barclays Premier League champions sit eight points behind the table-topping Gunners and will feel that victory over Arsene Wenger's side is crucial to continuing the process of pegging back the leaders.
Former Reds star Pallister, who was supporting the Manchester United Foundation Chevrolet Trax eBay auction, was asked for his assessment of the start to the 2013/2014 campaign.
"I guess it's been middle of the road," he conceded. "You can't get away from that. There have been a few disappointments but some good performances in there as well. Hopefully, we're starting to hit our straps a little bit as the last few games have been good and you've seen a decisive United side.
"But it's going to be a big test come Sunday. This Arsenal team have started the season fantastically well and are playing great football with style and panache. They've still got their detractors out there who think they are not good enough to win
Gary Pallister was promoting The Manchester United Themed Chevrolet Trax Auction.
For your chance to own a Chevrolet Trax signed by United players, bid online at www.ebay.co.uk/trax-man-utd.
The auction closes at 19:00 GMT on Wednesday 6 November.