The Pharaohs, who were eliminated in the quarter-finals following a narrow 31-29 defeat to Spain, bounced back strongly to close out the tournament on a high note.
Iceland held a 17-12 lead at halftime, but Egypt staged a second-half comeback, outscoring the Icelanders 21-14 to seal the win.
The tournament, hosted by Egypt from 6 to 17 August, featured 32 teams competing for the gold medal.
The hosts began their campaign with commanding wins over South Korea (46-27), Bahrain (36-28), and Japan (36-28) to advance to the main round.
In the next phase, Egypt drew 35-35 with the Czech Republic and 29-29 with Denmark before delivering a dominant 47-26 victory over Norway in the first round of the placement matches.
Sunday’s win over Iceland capped a strong finish for Egypt, whose World Championship journey ended on a positive note.
Spain will face Germany in the gold medal match, also on Sunday.
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