The gauge is installed right. The pump does not make pressure, it makes flow. Pressure is the resistance to flow. I
one of 4 things is happening,
1) the pressure relief is set way too low,
2) the cylinder is bypassing,
3) the pump is bypassing internally, or
4) the valve is bypassing.
2 of the 4 are easy to test. I linked a decent video to test the cylinder already. Only requires 2 plugs/caps to test. The pressure relief is the easiest to test. It's on the valve, hiding under the plug next to the return line. Pop the plug out and see if the spring is broken or ball/ seat is messed up. You can also shim it (the spring)to see if it increases pressure before it hits relief. The pump needs a flow meter hooked up to it. They are kinda expensive for casual use. But a hydro shop can test it. Likewise with the valve, I'm not certain how to properly test it, but in this case they are cheap enough to toss a new one on.
I'd start with the cylinder, then relief, then pump.