OK, update. Unfortunately, as I began to T/S, the problem was not present and the gauge was reading normally.
I pulled the Volvo panel and removed the connector and the gauge. There was light corrosion on the male and female spade connectors. I cleaned up the male connectors with a fiberglass pencil tool and I soaked the female spade connectors in vinegar before brushing with the fiberglass pencil as best I could. I pinched the female shoulders of the spade connector too. I sprayed all connections with DeOxit cleaner and reassembled. BTW, I cleaned all of the connectors for all three gauges at this time.
Upon startup, the temp gauge looked good- reading normally. The next day after 30 minutes of running the temperature gauge went erratic again. From normal 185F to 250F to 200F and back to normal. It did this repeatedly.
So obviously the problem was not fixed.
I am now thinking that the problem may be inside of the gauge. I still think it is a grounding problem. The ground for the temp gauge is in a string connection with the other two gauges and the tach. All other gauges are reading properly with no erratic movements. This suggests that the ground failure is at or inside of the gauge. The ground is also connected to a circuit board whose function is unknown.
Lastly, on a 2.5 hour run this afternoon the temp gauge performed normally. No erratic movements at all.
So it looks like my following action choices are:
1- Live with the problem. Believe the gauge when it is not jumping around and ignore it when it goes berserk.
2- Replace the gauge and see if the problem returns. A Volvo gauge is $100 but I could swap in a generic temp gauge for under $20.
I hate intermittent problems. I need to visually see the problem or measure the symptom and then after doing a repair be able to observe or measure that the problem is gone. If I can't do that, then my confidence that I have fixed the problem is low.
Here are some before and after cleaning photos of the spade connectors. BTW, there are diamond blade cleaners that are supposed to be good for female spade connectors. I have some on order for the next malfunction......