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Since about '85-'86, or so, Volvo used an electronic speedo. You have a '92 -- therefore, no cable.
The pickup for the speedometer is an electronic sensor mounted in the cover of the differential. It generates pulses as an internal "vane"-like device spins with the axle -- approximately 10 pulses per revolution. The speedometer is somewhat like a tachometer in that it integrates these pulses to give you an analog readout of the "digital" pulses.
From a general standpoint, several things could cause the behavior you observe. False pulses would cause this, either from the sensor or introduced into the instrument cluster. These pulses could come from ignition or from a poor connection (or ground) somewhere in the wiring. They might be noise in the power supplied to the instrument cluster.
Another possibility is simply an intermittent connection -- perhaps vibration sensitive -- at the speedo sensor (on the diff cover).
An unsteady supply voltage to the speedometer circuit could cause meter instability.
A bad connection to the speedo head, in the cluster, might also create this symptom.
Also, a marginal or poorly adjusted sensor might be "dropping" pulses at higher speeds.
If I were chasing this problem, I'd start by resoldering the cluster PCB, tightening connections and connectors, and checking the voltage stability. I would also clean, tighten, and grease the connector at the rear axle.
Finally, I'd probably use a battery-powered oscilloscope to watch the pulse quality as I drove at various speeds. This would tell me if the sensor or circuit had a problem or if the meter had the problem.
--
Don Foster (near Cape Cod, MA)
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