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In your <site-name>.test. For me this was located in myuser/.config/valet/Nginx

server {
        location ~* ^.+\.(svg|svgz|jpg|jpeg|gif|png|ico|bmp)$ {
        try_files $uri @image_fallback;
    }

    location @image_fallback {
        proxy_pass http://<production-url.com>;
    }
}