Before I started changing things from specs like timing, I
would get a complete scan done by a good technician.  You
may have a bad knock sensor that is not sensing impending
pinging to allow the ECM to adjust properly.  Also, I don't
recall that engine being a premium fueler.  Using premium
fuel in Fords that do not call for it can lead to excessive
combustion chamber carbon which will result in knocking.
There are processes to decarbonized a moderately fouled
engine.  Extreme cases may require removal of the heads for
cleaning.

DO BELOW FIRST!

Another common problem is a fouled Mass Air Sensor (MAF)
located in the air intake pipe.  It is easily cleaned and
this is exactly where I would start.  If you have a K&N air
filter, it is almost a sure bet this is the problem because
it is easy to over oil the element and foul the MAF sensor.
There are instructions for cleaning the MAF with good pics
at several places on the internet.  Just google for Ford,
Mustang, Lincoln or whatever your favorite product mabe
along with clean MAF sensor.  Most cars in this country now
have some version of this.  This is a quick, easy
inexpensive repair if you have any mechanical skills at all.
You will need a good residue free electrical contact cleaner
and a Torx security bit set available from most of the chain
auto stores for under $10.  Once you have these items, you
are less than 15 minutes from completing the job.  Be
careful not to damage the sensor wires.

Lugnut

That sounds more like a small exhaust manifold leak rather than a
knock. If that is what it is, then retarding the timing will make it
sound louder.

-jim

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I've run into this before on a '95.
The other 2 replies are a good place to start, clean the MAF and check
code history.
The problem with mine was carbon buildup.
I did 2 major top end cleanings, the first with sea foam and the
second with GM top end cleaner.
On a hot motor, drizzle 1/2 the can into the intake, then dump the
rest in at about 3000 RPM.
Wait a while, pull the plugs and crank to eliminate the possibility of
hydrostatic lock. Gap new plugs
at (I think, it's been a while) .049 and reinstall, a bit tighter than
spec, which I think is .052-.056.
Then drive it like you stole it.
HTH
Ben