They weren't originally supposed to be. They were supposed to be straight and basically a female version of Hercules and Iolaus' friendship in its parent show. It was only because the lesbian community in New York became fans of the show that Xena and Gabrielle conveniently developed a "subtext" in their friendship/relationship.

Xena canonically falls in love and is sexually attracted to several men through out the series. Xena does not have to be a lesbian in order to love Gabrielle. That's where people, unfortunately Lucy included, get it wrong.

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Interesting. It always seemed that way to me.
All for a box of chocolates

Lucy Lawless has stated on several occasions that yes Gabrielle and Xena were lovers . The writers also stated that as the episodes went on that they wrote the episodes more towards subtext meaning that Xean and Gabrielle were a couple without explicitly stating it.

Gabrielle's interest in men more or less
stops after season 2 or 3 so an argument could be made she came to terms with her sexuality as a lesbian later.
Xena is bisexual.