A battery powered oscillator in a freely movable pointer drives a coil and a divider. A grid of spaced conductors in a base unit is inductively coupled to the coil. A conductive plate that lies parallel to the conductor grid capacitively couples the signal from the divider to a phase locked loop to provide a reference signal that has a constant phase in relation to the oscillator. Detection circuitry uses the signals induced in selected grid conductors and the phase reference signal to determine the location of the pointer relative to the conductors. As an alternative to the phase locked loop, the signal induced in an idle reference conductor can be combined with the capacitively coupled reference signal to aid in demodulating the induced signals. As an alternative to an oscillator in the pointer, the coil may be driven by a signal capacitively coupled from the base unit.