This would be consistent with an intermittent short-to-ground of the single wire going to the gauge sender.  Have a look inside the cable tray that runs along the length of the engine on (uk) driver's side.

It has been known ( ) for the wires running 'fore-and-aft' to chafe against the injector wires rising vertically up from the base of the tray. 

If no damaged insulation/bare copper visible in there, have a look* 'over the back' where the sender is, just between and below the DIS and EGR.

*Much, much easier said than done.  Mirror and torch?

mine did this,  went round check every pipe and found a pin prick in main pipe to the rad top hose, cheanged it and was fine.. might be like that on yours if lucky..

If you're not losing any coolant, headgasket failure seems most unlikely.

Under what conditions is the gauge overheat occuring? Stationary idle? Hard driving? Random? 

How long is the gauge showing scary-high temps for?  2 seconds or 2 minutes?  Does it drop back to normal without anything obvious having changed?

Can you hear the rad fan(s) coming on?