Just a thought . If you have any question about how good the earth is between the sender unit and the chassis , rig a second earth from the brass casing on the sender unit with a clip to the chassis and watch for any variation on the gauge once again. I have al edelbrock heads and rpm intake on my 347. The temp sender is close to the thermostat, is new and works fine. A victor water pump is also used. I run two earth straps from the engine, one 8mm to the firewall from the rear of one head and a 10mm from next to the engine mount to the chassis rail. Also the gauge itself maybe having an earthing issue and could be proved out by using a second temp earth.