Best Of

Ideally share the meshes, so the issue can be re-produced.

As a side note, looks like you have some hard edges without split UVs? Would expect visible seams there.

Two important considerations to think about with an asset like this:

1. It's best to align UVs vertically or horizontally, instead of diagonally. This avoids jagged/blurry artifacts from antialiasing, and improves downsampling for LODs and MIPs.

2. For hardsurface assets, you'll get better results by not using baked normal maps. Instead, it's better to use bevels and face-weighted normals. In a game engine, normal maps are usually 8bits per channel or less. And usually compressed, which makes things even worse. With smooth metallic surfaces, these bit depth and compression limitations mean you're going to end up with banding and seams, no matter what you do. Face-weighted normals help you avoid these problems.

Nothing is absolute, there are exceptions. But with what we've seen so far, I'd recommend option 2.

it's probably catching the top of the handle below the handguard. 

Try reducing projection distances in the baker.
You could also try using absolute projection distances rather than proportions of the bounding volume - with objects that are very non-square like this the porportional distances can be troublesome

if that doesn't work out, try using a cage