Because gold nuggets were found in Denver
Of course what did you think, the Detroit Pistons were? No the Denver Nuggets were.
They have always been called the Denver Broncos since they were founded in 1960.
No. The Kansas City Chiefs used to be the Dallas Texans. The Denver Broncos have been the Denver Broncos since their founding.
The gold rush came through Colorado, and they used to find gold "nuggets'. Hence, the denver nuggets