DIAGNOSIS The anvil assembly or hammer mechanism is failing. Debris or a broken hammer spring causes the noise.
FIX Remove the collet and inspect the anvil for wobble. Blow out the hammer case with compressed air. If noise persists, the hammer and anvil assembly needs replacement.
IF THAT DIDN'T WORK The planetary gear set could have a cracked gear. This requires disassembly and gear replacement.
HEADS UP Stop using it immediately. Running with a broken gear will destroy the gear housing.