Sometimes it is hard to figure out why these things do what they do. All I would suggest is try a different bullet and see if it does the same thing. I would suggest some 250 grain Shockwaves. My Knights shoot them very well.

If it does the same with a different bullet, or you try the same ones again with the same results, check the scope, the mounts, and if you have sights on it, then try the rifle with open sights. Also if you have a different scope, you might want to throw that on and see if the scope was to fault.

Also on your rest, were you resting on the barrel or the stock? I never rest a rifle on the barrel. I have found this to effect the accuracy as well.