- Select two appropriate colours (for gradient shades)

- Select Rounded Rectangular tool:

- Draw a simple ellipse:

- Create a new layer:

- Ctrl + Click on the vector mask in the first shape layer so that you can select only the ellipse:


- Select the Gradient Tool:

- Make sure that the gradient consists of the two colours you have already selected (you can find this in the top left corner under the menu):

- Select the new layer while the ellipse marquee is still highlighted, and draw a gradient from top to bottom:

- Optionally, an inner glow can give a nicer effect to the shape by right clicking the second layer, and selecting "Blending Options":

You can tweek the above settings for colour, size, and opacity of the glow.
- Click OK, and review the effects of the blend:

Note: the ellipse marquee selection should not be un-selected at this point.
- Create a new third layer:

- Select the Elliptical Marquee tool:

- From the top-left settings under the menu, select the intersect option:

- Draw an ellipse marquee selection outside the image to intersect with the top half of the image:

- Change your primary colour to white, then select the gradient tool with the white to transparent setting in the top-left corner under the menu:

- Draw a gradient on the new layer from top to bottom as shown below:

- Finally, deselect the marquee and review the image:

This can now work as a button image as shown in the below example: