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Remove the seeds of the bell peppers, peel the onions and roughly chop the bell pepper and onions. Peel and finely chop the garlic cloves.
Remove the seeds from the red pepper, depending how hot you like your goulash, and finely chop the red pepper. Remove any excess fat or muscles from the chicken and divide into bite-size pieces.
Season the chicken pieces with pepper and salt and coat them with a thin layer of flour. Heat butter in the large skillet and brown half of the pieces of chicken on all sides.
Repeat for the other half of the chicken pieces. If your skillet is large enough, you don't need to do this in batches of course. Add the onions, bell peppers and mushrooms and cook some more on high heat until they're also golden brown.
Add the paprika powder, chopped garlic, red chili pepper, fennel and cumin seeds to the same skillet. Cook them for 2 minutes on medium heat, add the tomato paste and cook about 2 minutes more.
Add balsamic vinegar, water, bay leaves, thyme and canned tomatoes to the pan and season with pepper and salt. Put the lid on and turn down the heat so the goulash can simmer.
Check after about half an hour if the goulash is done, the chicken should be tender and the sauce should be thickened. If the sauce is too runny, you can cook the goulash some more without the lid.
Serve with rice, boiled potatoes or mashed potatoes. Enjoy!