Bring a large pot of salted water to a rapid boil. Add the potato gnocchi and cook until they float, about 2-3 minutes. Drain and set aside.

Heat olive oil and unsalted butter in a large skillet over medium heat. Add sliced onions, stirring to coat. Cook for 15-20 minutes until golden.

Sprinkle onions with sugar and cook for an additional 5-10 minutes until caramelized and sweet.

Add the drained gnocchi to the skillet and toss with the caramelized onions for 1-2 minutes on low heat.

Sprinkle grated Gruyère cheese evenly over the mixture in the skillet. Cover for 2-3 minutes to melt the cheese.

Stir the gnocchi gently to mix in the melted cheese. Season with salt and pepper to taste, cooking for another 1-2 minutes.

Plate immediately, garnishing with fresh thyme leaves if desired. Serve hot.