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Watercolor Christmas Ornament Cookies

['All-purpose flour (for dusting)', '1 batch All-in-One Sugar Cookie Dough, chilled', '2 cups white royal icing', 'Red and green gel-paste food coloring', '3/4 teaspoon clear lemon extract', '1/4 teaspoon gold luster dust', '3–4" ornament cookie cutters; a small paintbrush']

Position racks in upper and lower thirds of oven; preheat to 350°F. Line 2 rimmed baking sheets with parchment paper.
Generously flour a rolling pin and work surface. Working with 1 disc at a time, roll dough to 1/4" thick. Cut out as many cookies as possible with cookie cutters (if dough becomes too soft, chill until firm). Place cookies 1/2" apart on prepared baking sheets. Chill 15 minutes.
Bake cookies until edges are light golden brown, 10–12 minutes. Transfer to wire racks and let cool.
Place icing in a wide shallow bowl. Add water by the teaspoon and stir to combine until slightly runny. Dip cookies face down into icing, just enough to cover the front and reach the outer edges, being careful not to completely submerge. Lightly shake cookies to level out icing. Transfer cookies to wire racks to let icing dry completely before decorating, about 3 hours.
Mix each food coloring with a small amount of water to dilute in separate bowls; the more water you add, the lighter the colors will be. Fill 2 small bowls with clean water.
Lightly dampen paint brush with water. Working with half of cookies and 1 color, lightly dab a few patches of watercolor “paint” over icing. Dampen brush in clean water. Brush along edges of darker paint to create a watercolor effect with the color fading out gently. For added texture, lightly tap brush over cookie to splatter droplets of color. Transfer cookies to a wire rack to dry as you work. Repeat painting technique with second color on remaining cookies. Let dry.
Mix lemon extract and luster dust in a small bowl to create gold paint. Using a clean paintbrush, splatter cookies in gold and paint tops of ornaments. Let paint dry completely before storing cookies.
Cookies can be made 10 days ahead; store in an airtight container at room temperature.

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