Knitting a gauge swatch in the round can be a pain. You have to work on it twice as long to end up with the same width to measure as a flat swatch: an 8" circular swatch is 4" when flattened to be measured. There are two ways around this:
1) Knit a 5" circumference circular swatch (make it a good 3" - 4" tall) and then cut it once down the side so it's 5" wide flattened. You can't rip out the swatch to use the yarn in a shortage emergency (without a ton of ends to weave in!), but it works.
2) Make a flat no purl stockinette swatch (aka faux in-the-round swatch) with circular needles or double-pointed needles.
Instructions: Cast on a likely number of sts to equal approx 5" and knit a few rows of garter stitch to prevent curling. Now you're going to switch to faux in-the-round stockinette. Knit a complete right side row. Slide the sts to the opposite end of the circular/dpn and place that needle in your left hand. Strand the yarn very loosely behind the swatch and knit another row. Repeat until you swatch is at least 3" - 4" tall and finish off with a few more rows of garter stitch. Look ma, no purls!
This is a lot like making i-cord but you don't pull that stranded yarn tight, it has to be VERY loose to avoid distorting the swatch when it's being measured. The edge stitches are sloppy and must be avoided when measuring for gauge but that's OK, this is a swatch and not a work of art.
Optional: You can cut the yarn at the end of every row to avoid stranding it behind the swatch but that renders the yarn almost useless for shortage emergencies.
Info from here