DIAGNOSIS: That's the classic sound of a stripped hammer/anvil assembly. The internal hammer mechanism that creates the impacting force has worn out or broken its teeth.
FIX: This isn't a user-serviceable part. You'll need to replace the entire impact mechanism cartridge (DeWalt part number N/A, but often sold as an assembly). This requires disassembly of the tool: remove the front rubber boot, the retaining ring behind it, and the collar to access the cartridge. You'll need a spanner wrench or careful prying. It's often easier and similarly priced to send it in for service.
IF THAT DIDN'T WORK: If you hear the grinding but the tool still impacts weakly, check for excessive grease or debris packed around the anvil. Clean it out with compressed air and a rag, but the noise usually means metal-on-metal wear.
HEADS UP: Continuing to use it with that noise will completely destroy the mechanism, turning a repair into a paperweight. It's done for the day once you hear the grind.