Melt butter in a large pot over medium heat.
Add diced onion and cook until translucent, approximately 5 to 7 minutes.
Stir in garlic and cook for 1 minute until fragrant.
Whisk in flour and cook for 2 minutes to create a roux, ensuring it does not brown excessively.
Slowly pour in stock while whisking constantly to prevent lumps.
Bring to a simmer and cook for 10 minutes until slightly thickened.
Reduce heat to low and stir in heavy cream, smoked paprika, and nutmeg.
Gradually add shredded smoked Gouda, stirring constantly until completely melted and smooth.
Season with salt and pepper to taste.
Serve warm, garnished with fresh chives.