I believe the default reading is one bar, meaning that if you disconnected the coolant temp sensor it would still read that one bar.
That sensor grounds through the body of the sensor itself and can be susceptible to losing ground due to the "O" ring on that housing being a buffer or the bolts themselves are trying to to make the path to ground. A quick test would be to attach a wire to the coolant temp sensor body (the temp sensor on the head, not the thermos-witch on the radiator), the brass part, and attach the other end to a good engine ground. This would effectively give the sensor another path to ground. If the gauge now works properly, remove the sensor and clean the threads and also remove the housing that the sensor screws into and clean the mating surfaces with some scotch brite.