I have a DEM (xyz format) which I want to apply to a "flat" map texture to create a shaded relief, preferably with software that is available for free.
See gdaldem, which you can use from a command-prompt:
$ gdaldem hillshade dem.xyz hillshade.tif
There are also a few other interesting modes with the utility that are worth exploring.
The modules that would be of particular interest (in version 2.0.8) would be:
- Import/Export - Grids - Import Grid from XYZ
- Terrain Analysis - Lighting, Visibility - Analytical Hillshading
- Import/Export - Images - Export Image (bmp,jpg,pcs,png,tif)
In addition to the mentioned GIS Software Tools I'd like to add uDig in combination with jgrasstools (Spatial Toolbox):
Hope that helps