1 of 2 things 83K5, either the wire is melted on something to a dead ground, or just a bare spot has hit ground, but it usually cuz the gauge wire has burnt on a manifold. #2, the temp sender is bad and its now going full ground internally of the sender switch itself. Full Ground will always go to direct pegged.
How those electric guage switches work, is the sender is threaded into the block so its got its ground naturally. (if the ground strap to the chassis to firewall is correct), then the usually green wire to the guage sends voltage in milivolts or less than 12volts to the guage to move the needle. If I am recalling correctly, as an example if you have a guage that reads 0-260, then 0 would be 12 volts, as the motor warms the switch cuts the voltage down, so if 0 is 12volts, and 260 is close to zero volts or grounded to peg the gauge. So half of 260 would be 130, so at 130 degrees, the switch would be sending 6 volts, half of 12 to the guage. And that can also work backwards depeding on the vehicles ground system. American cars ususally do it right, *** cars do it wrong but its all the same principle just need to know which format is being used and what voltage scale is being used. I think its 5 volts that most fuel guages work off of in a GM vehicle for example. At least back in the 60's it was.