Grandpa s Tomato Gravy

8 slices bacon, cut into 1/2 inch pieces

1 large onion, chopped

2 (28 ounce) cans diced tomatoes

1 (14 ounce) can tomato sauce

1 teaspoon white sugar, or more to taste

½ teaspoon ground black pepper, or to taste

1 tablespoon butter

Place the bacon in a Dutch oven, and cook over medium heat, stirring occasionally, until the fat starts to cook out, about 2 minutes. Add the onion; cook and stir until the onion has softened and turned translucent, about 5 minutes. Stir in the diced tomatoes and tomato sauce to the pan. Season with sugar and black pepper. Simmer until the sauce is reduced by at least 1/4 and up to 1/3, 30 to 45 minutes. Stir in the butter just before serving.