1. Open up a 400x100 white document
2. Create a new layer and select the Elliptical marquee tool and make a perfect circle by holding SHIFT and pressing on the blank document. Color the circle any color you want, I chose #A5A4A4 ( To fill in the selection, put the color you wish to be used in the background box and hit CTRL + BACKSPACE )
3. Now right click on Layer 1 and go to Blending Options and use these settings.
4. Now you should have a nice smooth circle like this
5. Create a new layer and select the Elliptical marquee tool again but this time make a bigger circle then before and color it with any color, I used the same color again #A5A4A4
Use the same settings as the first circle and you should have something like this.
6. With some details, this is what I came up with
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