Gay.

English borrowed gay from an old french gai, an adjective of uncertain origin connected by some with old high German gahi (sudden impulsive). (happy) is its ancestral meaning. The 20th century sense " homosexual " which first came into general usa ge in the 50's, seems to have arisen from an earlier American slang term " gay cat ", which originally denoted a young male tramp who was the companion of an older tramp. The implication of a homosexual relationship which this carried had led by the 30's to the use of " gay cat " for any young male homosexual, and the application of gay to homosexual was probably generalized from this.

Source: "Dictionary of Word Origins " by John Ayto.