temp gauge gone wild

Hi guys I have an 86 chevy c10 with 5.0 liter my problem is that intermittently the gauge just goes nuts all the way around to way past 260 back to nothing and everywhere in between then without warning it just goes back to normal. I know the problem is either in the gauge or the sending unit my question is can the sending unit cause this. Second where is the sending unit for the gauge located. Any help would be appreciated. By the way the truck is not actually overheating and the coolant level is good.