The Queenslander surged late in the day with three birdies in his final four holes to shoot 66 and reach 9-under, two behind a group of three players occupying top spot.
The English pair of Ian Poulter and Tommy Fleetwood are atop the standings at 11-under alongside American Justin Thomas who appears to be finding form ahead of defending his PGA title next week.
Day shares fourth alongside Kyle Stanley while Rory McIlroy and Si Woo Kim are at 8-under and T6.
Day’s playing partner for the first two days, Tiger Woods, is at 6-under and sharing 10th alongside Marc Leishman, Jon Rahm, Webb Simpson, Tony Finau and Louis Oosthuizen.
For Day, though, it was a case of what might have been and despite being pleased with his score and position pointed to his putter as a letdown on day two.
“The putter wasn’t as good as it should have been,” he told Golf Chanel’s Lisa Cornwell after the round.
No putter needed for @McIlroyRory.August 3, 2018
“I felt like I missed a lot of opportunities. I felt like I could have been a lot deeper but shooting 66 in the afternoon, where it’s about two shots harder I think, is not all bad.
“I think it’s a good place to be going to the weekend and if I can just pick up the putting a little bit hopefully I can get myself in contention on Sunday.”
He said the course set up would dictate scoring at the weekend, Firsetone unusually prone to low scores over the opening two rounds with the course playing soft.
“It depends on how they set the course up,” he said when asked how he thought the weekend might play out.
“The last couple of days we’ve played a course that’s been pretty receptive both on the fairways and greens.
“But if they start drying out the course a little bit…it’s going to get hot on the weekend and if they dry it out it’s going to be harder to hit fairways and greens obviously.
“But I feel good about my game tee to green so I’ll go and get some rest tonight and go out there and get into it tomorrow.”
Marc Leishman is next best of the Australians after an ultimately disappointing round of 69 which included a dropped shot at his 16th hole of the day.
The Victorian struggled to get any momentum with four birdies offset by three bogeys though he is well within range to play his way into contention tomorrow.
He and Day are the only two Australians in red figures, Wade Ormsby and Cameron Smith both even par and T46 while Adam Scott endured a horror Friday to sign for a 75 and slide to 3-over and T60 in the 71 player field.
SIGNATURE HOLES - 3RD AT NAROOMA GC, NSW:
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