The Australian is sitting at nine under for the tournament, two behind new leader Richard Lee at The Club at Chatham Hills in Westfield.
After promising to put his "head down and bum up" after his opening-round 63, the Queenslander needed to call on all of his fighting spirit on Saturday (AEST) to remain close to the lead.
Unlike his seven-under display where he found his groove and made seven birdies with the help of a hot putter, it was more of a grind in the second round.
Smith made birdies on the second and fifth holes, but then found trouble on the sixth and eighth where he made bogeys.
He steadied before making a birdie on the 11th, before another bogey on the par-three 15th - a hole he birdied the previous round - dropped him back in the field.
But the 2022 British Open champion stormed back into contention with birdies on the 16th and last holes to jump into a tie for fifth with six others, including the day's big mover in Michael La Sasso (60).
It's the highest Smith's been for a while in a disappointing season, by his standards, with a tie for seventh at the PGA Championship and two tied eighths in LIV Golf at Adelaide and Singapore his best results in 2026.
Leader Lee, of Canada, moved in front after a four-under 66.
Lee holds a one-shot lead over Dustin Johnson (66), Belgian Thomas Detry (64) and first-round leader Laurie Canter of England (68).
The 35-year-old is in his first season with LIV Golf after he won the league's promotions event in Florida last winter.
He called the season "a dream come true" Friday, despite LIV's uncertain future in the wake of the Saudi Public Investment Fund withdrawing their backing after this year.
"Coming out here, just having everything I want and everything I need. The courses are spectacular, and the conditions are amazing," Lee said. "People are nice. Just being on a tour like this is just a dream come true."
Lee's opening seven-under 63 had him one behind Canter.
He birdied three of his first five holes and four of his first seven to surge in front. After consecutive bogeys at Nos.9-10, he regained those two strokes with birdies at Nos.13 and 14.
"I don't want to think too ahead for myself, but yeah, definitely a victory would be amazing," said Lee, a journeyman who has only won on the Asian and Korean tours. "It's always been a dream to play with these guys and have a big victory out there."
Marc Leishman shot a three-under 67 and is at seven under, with Lucas Herbert (69) two behind.
The all-Australian Ripper are now fourth in the team standings after dropping two spots from Friday (AEST).
with Reuters
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