Overheating? Temperature gauge near max?

Hi, I have a T reg Escort 1.8TD Finesse.
When I set off the temerature gauge very rapidly rises to near the maximimum. I can keep it just below the red by staying at or around 2000 revs. After driving some distance I checked the engine, I could place my hand most places without burning. The coolant in the tank was still cold. I had the sensor replaced believing it to be faulty but the problem persists. The heater system works normally or maybe hotter than normal.
Is the engine really overheating or is the gauge faulty?