create XML file using bash script

Use in-line document with cat

cat >destfile <<EOF
<your ZML here...where $vas expand happly>
but the rest remain as is
EOF

I used it in a lot of scripts. Consider also envsubst command to restrict variables you can use in the in-line document.

Frustratingly perhaps, one of the combinations you omitted would have worked:

echo "<root><foo a=\"b\">$lorem</foo><bar value=\"ipsum\" /></root>" >> $MY_XML

Single quotes leave everything exactly as you type it. Escaping with \ will not work. Double quotes will evaluate the string. Inside double quotes you can use \ to escape specific characters (including the double-quote character itself).

You could also combine parts of the string that are quoted in different ways. Here, $lorem remains double-quoted but the rest of the string is surrounded with single quotes:

echo '<root><foo a="b">'"$lorem"'</foo><bar value="ipsum" /></root>' >> $MY_XML

The issue is that you are using your variable in a single-quoted string. The shell will never expand variables in single quoted strings.

Another issue is that the value in $lorem would not be properly XML encoded, so a value like <!-- would mess up the XML document and make it unparseable.

Instead, use jo from https://jpmens.net/2016/03/05/a-shell-command-to-create-json-jo/ to create a JSON document and the yq tool from https://kislyuk.github.io/yq/ to convert this to XML:

$ lorem=LOL
$ jo -p 'foo[@a]'=b 'foo[#text]'="$lorem" 'bar[@value]'=ipsum
{
   "foo": {
      "@a": "b",
      "#text": "LOL"
   },
   "bar": {
      "@value": "ipsum"
   }
}

Then pass this through yq -x --xml-root=root . to convert to XML and wrap it in a top-level root node called root. Keys starting with @ will be turned into node attributes, and the value of the #text key will be turned into the node's value.

$ jo 'foo[@a]'=b 'foo[#text]'="$lorem" 'bar[@value]'=ipsum | yq -x --xml-root=root .
<root>
  <foo a="b">LOL</foo>
  <bar value="ipsum"></bar>
</root>

With the value <!-- in $lorem:

$ lorem='<!--'
$ jo 'foo[@a]'=b 'foo[#text]'="$lorem" 'bar[@value]'=ipsum | yq -x --xml-root=root .
<root>
  <foo a="b">&lt;!--</foo>
  <bar value="ipsum"></bar>
</root>

Or, with the literal value $lorem in the variable:

$ lorem='$lorem'
$ jo 'foo[@a]'=b 'foo[#text]'="$lorem" 'bar[@value]'=ipsum | yq -x --xml-root=root .
<root>
  <foo a="b">$lorem</foo>
  <bar value="ipsum"></bar>
</root>

When you interpolate values into XML template make sure to escape special characters:

escape() {
    local val
    val=$1
    val=${val//&/&}
    val=${val//</&lt;}
    val=${val//>/&gt;}
    val=${val//\'/&apos;}
    val=${val//\"/&quot;}
    printf %s "$val"
}

lorem="\"Foo\" & 'Bar' & <Baz>"

cat << EOF
<root><foo a="b">$(escape "$lorem")</foo><bar value="ipsum" /></root>
EOF