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This is the Engine Coolant Temperature sensor (ECT). This is different from the sensor that runs the dash gauge. The fault can be in the sensor itself (you didn't install with any thread lock/sealant/tape, did you?), the wiring, or the ECU (least likely). I'd start by testing the sensor itself while in the car. You can get the specs from a manual. You use an Ohm meter to see if the resistance corresponds with the temperature. Start with a cold engine and put a thermometer in the overflow tank to get a temperature reading. Then measure the resistance of the ECT and see if that corresponds to what is in the manual.
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