Hormones influence it:
According to a study just published in the journal Psychological Science, women are significantly better at judging male sexual orientation as they approach peak fertility. A research team led by University of Toronto psychologist Nicholas Rule also found romantic thoughts heighten women’s ability to discriminate between gay and straight men. Rule’s previous research has found men and women are surprisingly good at judging sexual orientation, particularly when we go with our initial instincts about a person. He also found gay men tend to be more accurate in their judgment than their straight counterparts.
Sanjay Srivastava downplayed gaydar's accuracy awhile back:
The reported accuracy rates in the articles … say that people guess correctly about 65% of the time. Better than chance, but nowhere near perfect. In fact, you can go a step further and get Bayesian on the problem. Let’s assume that the 65% accuracy rate is symmetric — that guessers are just as good at correctly identifying gays/lesbians as they are in identifying straight people. Let’s also assume that 5% of people are actually gay/lesbian. From those numbers, a quick calculation tells us that for a randomly-selected member of the population, if your gaydar says “GAY” there is a 9% chance that you are right. Eerily accurate? Not so much. If you rely too much on your gaydar, you are going to make a lot of dumb mistakes.
The Dish 