ProxyCommand connect to internal lan

I‘ve ssh gateway behind my NAT firewall. So all users must first login to my gateway host from the internet and then login to other machines on the LAN. This works great for cli based apps. However, few users would like to run x apps from internal LAN hosts and tunnel X display through intermediate ssh gateway and display back output on their local system. For example, from localsystem user makes connection as follows:

ssh -X
ssh -X

X forwarding fails with an error:

Error: Can’t open display:

How do I fix this problem and allow users to use X apps with my intermediate Linux / BSD gateway?