A wearable computing device such as a head-mounted display (HMD) may be equipped with a magnetometer for detecting presence and motion of a hand-wearable magnet (HWM). The HMD may analyze magnetic field measurements of the magnetometer to determine when the HWM moves within a threshold distance of the magnetometer, and may thereafter determine one or more patterns of motion of the HWM based the magnetic field measurements. The HMD may operate in a background detection state in order to determine a background magnetic field strength and to monitor for magnetic disturbances from the HWM. Upon occurrence of a trigger event corresponding to magnetic disturbance above a threshold level, the HMD may transition to operating in a gesture detection state in which it analyzes magnetometer measurements for correspondence with known gestures. Upon recognizing a known gesture, the HMD may carry out one or more actions based on the recognized known gesture.