The seven were reportedly detained on Monday for "promoting sexual deviancy", but have not yet been formally charged.
Prosecutors opened an investigation after images from the concert by the Lebanese band Mashrou' Leila - whose lead singer is openly gay - went viral.
Homosexuality is not explicitly criminalised under Egyptian law. But the authorities routinely arrest
people suspected of engaging in consensual homosexual conduct on charges of "debauchery", "immorality" or "blasphemy".
The advocacy group, Solidarity With Egypt LGBTQ+, said late last year that it had recorded 114 criminal investigations involving 274 lesbian, gay, bisexual and transgender individuals since 2013.
The raising of the rainbow flag was a rare public show of support for the LGBT community in the conservative Muslim country.
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