We report the effect of gold precursor and reaction conditions on the catalytic activity of gold-alumina catalysts prepared by the sol-gel process. Gold catalysts prepared by the sol-gel method were found to be the most active catalysts ever reported in the literature. We found out that the final activity of Au on alumina was a strong function of the gold loading, the gold precursor and an activation procedure. The Au on alumina catalyst, prepared with 0.8 wt.% gold loading and gold acetate, showed the highest activity. Increasing the feed oxygen concentration had many beneficial effects on the activity and also resulted in the broadening of the temperature window of activity for the 0.8 wt.% Au(acetate) on alumina catalyst. Interestingly, we found out that NZ selectivity of the catalyst was a strong function of water in the feed. The 100% N-2 selectivity at peak conversion, obtained under the dry reaction conditions, decreased to similar to58% when there was similar to2% water in the feed.