We propose a new contact detection algorithm for fine pitch wire bonding. Fast and stable contact detection of the z-axis in wire bonding is extremely important to maintain the quality of fine pitch gold wire bonding processes, which use a small pad less than $70{mu}m$ in diameter. A small perturbation in the contact detection time causes a large difference in the size of the formed squashed ball. The new detection method is based on a statistical approach and designed for a discrete Kalman filter. It is faster and has smaller detection time variations than conventional detection methods. Experimental results are presented to demonstrate the advantages of the proposed algorithm.