The thermostat failing in the open position keeps a constant flow of coolant and wont allow the engine to reach its optimal temp. Mine failed open and wouldn't allow the engine to get hot enough so the heater wouldn't work since the coolant wasn't getting above 165 which is cool as your gauge would show. The other option is a faulty gauge, but likely its the thermostat. I drive a 96 Jeep grand Cherokee with a 5.2l 318. I found that the "failsafe" thermostats do indeed fail in mine, went through 3 in 6 months.
Bad groung and or bad sending unit.
StUck in open position
Low coolant, check when engine is cold.
then you better stop and let it cool down
Take wire off temperature sender look a guage. If guage at cool, temp sender needs replacement. If guage still at hot, temp sender wire shorted to engine or vehicle body.
A bad thermostat is one possibility.
Have you had the coolant temp sensor checked? It might be that the engine is running hot but the sensor isn't showing the temp is hot.
Thermostat is sticking.
If the gauge is reading hot and the car is running normal temperatures, the water temperature sensor needs replaced.
stop
transfer heat energy from the hot object to the cool object until they reach thermal equilibrium.
A faulty temp sending unit can do that.