Gold futures on the COMEX division of the New York Mercantile Exchange settled in the positive territory on Tuesday after a plunge of 1.65 percent during the previous session.
The most active gold contract for December delivery went up 1.8 U.S. dollars, or 0.15 percent, to close at 1,200.70 dollars per ounce.
The financial turmoil in Turkey sent shock waves to the European and global markets, driving investors to the rising U.S. dollar, with expectations for further interest hikes later this year.
However, the precious metal, usually viewed as a safe haven asset, gradually regained its traditional role amid market turbulence, said analysts.
Meanwhile, bargain hunting also pushed up the gold prices from the lowest level in the past 18 months.
The U.S. dollar index, a gauge of the greenback against a basket of key foreign currencies, continued to rise 0.32 percent to 96.56 as 1648 GMT.
But a stronger dollar failed to drag down the Turkish lira any further. On the contrary, it fell more than 7 percent on Tuesday against the recovering lira, and the crisis atmosphere appeared to be more subdued.
As for other precious metals, silver for September delivery rose 7.1 cents, or 0.47 percent, to close at 17.053 dollars per ounce. Platinum for October went up 2.20 dollars, or 0.28 percent, to settle at 801.70 dollars per ounce.