Catalysts consisting of Au, Pd and their alloys have been shown to be active oxidation catalysts. These materials can use dioxygen or hydrogen peroxide as the oxidant with CO and activated organic molecules using O2(g) while more challenging cases, such as methane to partial oxygenates, relying on H2O2. Although H2O2 is a green oxidant, the incorporation of dioxygen greatly reduces overall cost and so there is an incentive to find new ways to reduce the reliance on H2O2. In this study we use DFT calculations to discuss the direct synthesis of H2O2 from H2(g) and O2(g) and use this understanding to identify the important surface species derived from dioxygen. We cover the adsorption of oxygen, hydrogen and water to model Au and Pd nanoclusters and the oxidation of the metals, since reduction of any oxides formed will consume H2. We then turn to the production of a surface hydroperoxy species; the first step in the synthesis of H2O2. This can occur via hydrogenation of O2(ads) with H2(ads) or via protonation of O2(ads) by solvent water. Both routes are found to be energetically reasonable, but the latter is likely to be favoured under experimental conditions.