The Villans are currently one point above the relegation zone with 15 games left to play this season, and are yet to strengthen their squad in the January transfer market.
Gray believes that manager Paul Lambert has a difficult challenge as far as keeping Villa in the top flight is concerned.
"If you asked me at the start of the season I wouldn't have thought Aston Villa would have had any sort of problems," Gray told talkSPORT. "But I do fear for them at the moment.
"Aston Villa are a fragile team. Their confidence is shot and their performances aren't up to much.
"Villa are on the verge of going out of this league in the worst possible year. They've got 15 games to go and Paul has to find some belief. Confidence is rock bottom. They need to get right behind them. Paul needs to find a system and stick with it. Say: 'this is the team'. No more chopping and changing players and systems, he needs a bit of stability into his selections."
Villa host Newcastle United on Tuesday night.