I have thoroughly enjoyed being in this part of the world during these two high holy days. During Ramadan, walking through East Jerusalem I saw young girls holding hands and walking arm in arm. Young me (18+ y.o.) are walking arm in arm down the street, or arms around each other's backs as they walk down the street.
Likewise, coming up from the Western Wall Esplanade, I have seen young boys tugging and hugging each other, while Israeli soldiers josh each other playfully and physically.
But are they gay per se? I would have to say "no." There have been the slightest, subtlest forms of flirting with some men on the street, but nothing overt like the streets of the USA. Jerusalem is not a safe city to be gay in, from what I can tell so far. I've not seen a rainbow flag, seen any dating among same sex folks, or heard any music that would inspire such outward signs. I knew of one gay bar in Jerusalem, but we aren't going there. I know one of the mayoral candidates was anti-gay.