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I wouldn't work in CMYK at the sort of stage when needing to use the Smudge tool.
What brush preset are you using?
What direction are you dragging the pixels? Dragging darker pixels towards lighter pixels is going to produce 'apparent' banding. Dragging back the other way should fix it though.
The smudge tool is an incredibly useful tool for illustrations. I use it constantly, and usually with a fully soft round brush. If I need to be subtle then I set opacity or strength jitter to pen pressure.
There are some smudge tool presets among the Kyle Webster sets added with CC2018, but I wouldn't say they work like magic.
I switched over to CMYK to see if it would help alleviate the problem, but I am still working in RGB. This problem occurs with all of my brushes and happens when I drag the lighter pixels towards darker pixels and vice versa. The soft round brush is the only one that can get away with smudging lighter colors, but the darker the color is, the worse the effect.
Honestly, the fact that this problem only just started occurring recently is making me post this. Smudging worked fine for me back in December. Six days ago, I painted something that should have clued me into something being wrong, but today, working on a character with dark blue skin just confirmed that quiet worry I had.