Gnuplot with xterm in yosemite

I installed gnuplot on my yosemite system using brew. When I try to plot cos(x) the way I would on ubuntu, I get this:

gnuplot> plot cos(x)
WARNING: Plotting with an 'unknown' terminal.
No output will be generated. Please select a terminal with 'set terminal'.

I also notice that when gnuplot loads, it says Terminal type set to 'unknown'. I would like to load the graphs in a new window, so I tried set terminal xterm, which seems to work at first glance, given the message Terminal type set to 'xterm'. But then I try plotting again, and it produces garbage:

How do I get the terminal to function correctly, as it does on ubuntu?